Everybody wants to save money on taxes legally.
To lower the amount you pay in taxes is an especially important goal for small business owners. After all, to avoid paying every penny in taxes is a double victory: you avoid overpaying and add to your bottom line. Here we list seven tips to use to spot potential savings or watch the video we put together for you below.
1. Use Your Home Office to Your Tax Advantage
The first way to save money on taxes legally, is to attempt to figure out the right amount. This will take a little bit of calculating; however, for some small business owners it will be worth the effort.
2. Your Vehicle Expenses Are Another Tax Deduction Option
Choose between two different ways of deducting vehicle expenses. There is either the actual expense method, which requires you to track the actual expenses and miles you travel. Or, apply the optional mileage rate to the business miles you travel.
3. Get Into the Habit of Keeping All of Your Receipts
Next, anything that you pay for that goes towards operating your business may represent an offset and deduction. Therefore, it is important to save your receipts. They are your proof
4. Future Retirement Savings
Ah yes, retirement, we all look forward to it, right? Here’s another way small business owners save money on taxes legally. Cut your taxable income while saving for your future. Therefore, make a point of putting some of your extra income into a retirement fund. This will help you to plan for your future, and it allows you a tax deduction.
5. Family Members as Employees for Tax Savings
Many family run businesses have relatives working for them. So, why not bring your family members on board for tax savings for your family business? Also, make sure you prove that the relative is doing something essential to your business. This allows you to take a business deduction on what you’re paying them.
6. Remember Your Equipment Counts
Did you know that the small business owners save money on taxes by taking advantage of the equipment they purchase? Therefore, take advantage of 100% bonus depreciation on IRS Sec 179. This allows you the option of expensing equipment for the year, or depreciating the equipment, whichever is best for you.
7. Remember Your Carryovers
Finally, the IRS entitles you to qualifying credits or deductions. However, they can’t be used in a single tax year. Why not carry them over and get the tax credit or deduction in the following tax year?
Do you have questions about other ways small business owners save money on taxes legally?
Taxes are often complex, it is wise to contact our office to make sure you are taking full advantage of the tax code. Call our office at 781-849-7200 and ask for Alex Franch, BS|EA. You may also email us at contactus@worthtax.com. With tax season here, we highly recommend that you set up your appointment today! We offer a variety of client discounts to save you money.
Alex Franch, BS EA
Alex is a Tax Specialist and Partner at Joseph Cahill & Associates / WorthTax. He has a diverse background including a Bachelor of Science from Boston College in Mathematics and extensive military service. Alex is an Enrolled Agent and has a decade of tax preparation experience. He is passionate about serving businesses with tax and financial planning.
Sources and Resources
- Getting the W-4 Right is Important!
- Form 1099 Miscellaneous Filing Deadline
- IRS Tax Guidance: S Corporation Stockholder, Reasonable Compensation
- 12 Common Tax Problems to Avoid
- Tax Reform is Confusing Part 2
- Tax Reform is Confusing! Here is a Side by Side Comparison Part 1
- Learn About This Year-End Tax Strategy
- Natural Disaster Relief
- We Have a New Tax Preparation Office
- Emergency Savings: 67% of People Don’t Even Have $500 Emergency Fund
- Did You Donate to Charity?
- Don’t Expect the IRS to Take Your Word on Charitable Deductions – Substantiate
- Charitable Contribution: Tax Plan for Potential IRA-to-Charity Provision
- Home Office Tax Deduction Good or Bad?
- 529 Plan: Higher Education, Learning the Hard Way
- Minimizing Tax on Social Security Benefits
- Employee Business Expenses: Tax Reform Suspends Tax Deduction
- Preparing Taxes for 2018 and Beyond
