Everyone wants to save on taxes! If you’re a small business owner, you may have more ways to save on taxes than most people. You want to make sure that your business is paying for all your business expenses.
Business expenses lower your company’s profits and result in a lower tax bill for you or your company. On the other hand, if you’re paying for an expense with your personal money, the tax man has already gotten his share.
Before you act on any ideas in this article please consult your tax professional!
1) Hire an unemployed veteran and get the work opportunity tax credit.
2) Use independent contractors instead of employees.
There are no payroll taxes with independent contractors.
3) Hire your children
To do odd jobs for your business instead of paying them an allowance. You can deduct the cost of their salaries.
4) Take advantage
Of deductions for business travel and entertainment expenses.
5) Use airline miles
For personal travel and not business travel, when you have the choice. You can deduct business travel expenses. In general, try use the reward points that you accrue for personal use and spend cash for business transactions.
Tip from David Kelsey of KelseyMedia.com
6) Have lunch meetings.
When you dine with your employees or business partners, 50% of the cost is deductible, so long as they are not lavish or extravagant expenses.
7) Deduct the business use of your car
Tip from 1040.com
Deduct your business cellphone use. If you use the same phone for business and personal calls, you can still deduct the business use portion of your bill.
9) Take Advantage of the Section 179 Deduction.
Instead of waiting, 5, 7, 15 or more years to slowly deduct your equipment, material or improvement costs, you can elect to depreciate more of it in the current year. Learn about the 179 Deduction here.
10) Deduct your moving expenses
If you move more than 50 miles from your current location for business reasons you can deduct the expenses.
11) Take the home office deduction.
Have your company pay for your health care premiums.
Keep It Separated
13) Keep your personal and business finances separate.
This simplifies things and makes it less likely that you will miss out on expenses that can be deducted.
14) Use the free smartphone app Expensify
To keep track of business expenses and receipts so you don’t miss any.
15) Do your taxes yourself using turbotax.
If you’re a one person business, it might make sense to do your own taxes. (Consider using Turbotax)
16) Use accounting software to record revenues and expenses.
This will save you tons of time when filing your taxes, and time is money. Read our accounting software buyer’s guide (which includes a free option) here.
17) File on time
IRS late filing fees are substantial and can add up quickly.
18) Ask for an exception if you do file late.
The IRS will normally waive penalties for you one time.
19) Choose the right state to incorporate in.
20) Choose the right business structure.
How your business is structured from a legal standpoint can have a major impact on your year end tax bill. Read our ultimate guide to choosing a business structure for more.
21) If you own multiple businesses, consider creating an umbrella company.
This can simplify the filing process and allow you to offset profits in one business with losses in another.
Manage The Timing of Business Purchases
22) Manage your year end revenues and expenses.
If you have had a big year, lower this year’s taxable income by moving up purchases you were planning on making the following year.
Benefits Instead Of Salary
23) Offer employees additional benefits instead of higher salaries or bonuses.
This saves you payroll taxes and you can deduct the cost of many benefits.
24) Put money into a retirement account.
Learn how to choose the right retirement plan for your business here.
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