By Contributing Author
Small business owners carry a heavy burden on their shoulders as it gets closer to tax time. While calculating personal income taxes every year can be somewhat complicated depending on your investments, income, and other financial considerations, figuring out the taxes for a small business can be a nightmare. Instead of getting frustrated with all of the requirements and regulations for filing corporate taxes, it’s best to develop a strategy to save. Here are five ways smart business owners save money on their corporate taxes each year.
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- Hire a Professional Accountant
No matter how small or large your business is, it’s a good idea to hire a professional to help you calculate your corporate taxes. An experienced tax professional will be able to give you back your precious time as tax day gets closer so you can focus more on your business and its profits. Additionally, a person well-versed in tax code could potentially help you avoid costly tax return errors. Making a mistake on your taxes could have serious implications, including fines or other penalties.
- Choose the Right Business Structure
You’ll also be able to potentially save money if you choose the right structure for your business. Many small businesses start off as sole proprietorships, but as you expand, you’ll need to consider a change to something more appropriate for a growing company. It may be better to look into ways to reduce individual liability by changing to an LLC or an S corporation. It’s best to talk to your professional accountant before making a decision about your corporate structure since every situation is unique.
- Have Accurate Records
Accurate records are another piece of the puzzle that help your company save more money during tax season each year. If you don’t have a solid system of keeping records for your company’s expenses, it’s time to create one. Over time, you’ll be able to deduct necessary business expenses to help lower your company’s tax liability. This way, the owners or shareholders will be able to earn more in profit each year and potentially invest more back into the company.
- Deduct Your Business Insurance
Business insurance is another key essential to first starting a company. The cost of business insurance can also be deducted each April when you or your accountant is filling out the corporate taxes. Discuss ways to make your business insurance better meet your company’s needs and budget by contacting your local insurance agency.
- Hire Your Kids
A final tip to help lower your tax responsibility for your company over time is to put your children on the payroll. Once your kids are old enough to contribute and are key players in your business, it’s time to bring them on the team. Having your kids work for you could help you save a bundle in taxes so your business can build a better legacy for the next generation in your family.
If you’re dreading the April tax filings for your business this year, stop and take a breath first. Consider these tips to help you feel more relaxed this tax season and get more benefits to your wallet.
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