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10 Ways To Reduce Tax Burden For Your Small Business |
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Everyone worries about taxes and looks for ways and means of reducing the tax burden. When you have a small business of your own you must up date your knowledge of tax laws that pertain to "small businesses." As a business owner you must understand clearly about accounting systems and tax planning. Sit down with your accountant and plan on ways of maintaining business expenses, filing receipts, planning on "tax saving" investments, and a strategy for running the business in the most beneficial way.
Did you know that:
- According to law you can reduce your tax liability
by hiring family members to carry out work in your
business. Pay your children and spouse to perform
assigned duties. This way you can shift from higher
tax rates to lower ones.
- Consider hiring independent contractors instead
of employees. You will save on payroll taxes. However
ensure that you meet the IRS’s criteria
- Think about "deferring income" postpone receiving
money to January instead of December. This means that
payments received will be up for "tax" calculations
a year away. However ask your accountant's advice
as the benefits are dependant on profit and losses
for the year and your corporate legal structure.
- Take advantage of tax deductions allowed for charitable
donations. Make donations in November or December
instead of January so that you can include the donations
for tax deductions in the current year.
- Maximize your expenditure on equipment and office
supplies. Buy in advance for a quarter and use the
tax deductions allowed in the current fiscal year.
- Include expenses of business related travel in the
current year
- Pay all bills due before the end of the year. Payment
to cell services, rent, insurance, and utilities related
to the business can be included for accounting and
applicable tax waivers.
- Plan a retirement plan and make payments before
the end of the year. This will reduce your income
for the year and proportionately the tax due. Be sure
to check on the limits. Plan a feasible and beneficial
strategy with your accountant.
- Be sure to deduct from your taxable income money
paid to licensing fees, businesses taxes, and annual
memberships to businesses related organizations. Be
sure to deduct interest paid on borrowings for running
the business and related fees. Insurance premiums
paid to insure the business office and machinery are
eligible for tax deductions. Make a list of your memberships
and check which ones are eligible for tax deductions.
- Check whether you have deducted management and administration
expenses as well as money spent on maintenance and
repairs of equipment.
Decide whether a cash accounting system or accrual one
will benefit your business. The tax deductions are different
depending on the system you use. When setting up your
small business take the advice of a tax and accounting
professional as to which accounting system would be most
suitable.
About the Author: Paul Wilson is a freelance writer for Legal Advice Discussion, the premier REVENUE SHARING discussion forum for Legal Advice Forum including topics on legal advices, legal information, lawyers, laws, tax, legal insurance and more. He also freelances for the premier Taxes Article Submission Directory site. |
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