As we all know how much effort goes into setting up our own business, we need to know how to prepare the company for the tax too. For sure, minimizing the taxes can be the difference between a profitable business and the one that is just going on. Thus, there is a need to understand how to deal with taxes.
We have seven helpful tips for the small businesses out there that can help to lower the tax bill and also it will not take a lot of the entrepreneur’s time.
Make the Tax Software your friend
Yes, you have to do this. The tax planning software for small business owners is important for the business to run. Hence, when you are using good software, it will automatically help you prepare to file the taxes online. Try to go the electronic way and ditch the paper to avoid the errors. You will reduce the errors by almost 20 percent. If you are okay with spending some money, then hire a bookkeeper who can help you do the taxes. Even with the smallest of CPA, you will have to pay more in the taxes. Hence, keep looking for avoiding paying many taxes. You can also follow some helpful tips from the CEO Julio Gonzalez.
Follow the spending to track all the deductions
If you keep a track of your spending, it will be a lot easier for you to file taxes these days. The credit cards you use will send you a year in review and every bank transaction you make will be made available online. Hence, keeping those expenses in track, you can still miss a few things. That is why use some software to keep track and also use the opportunity to find the deductible expenses.
Dedication comes with rewards all the time
You can use some software which can help you to track the spending throughout the year and this can make the whole process a lot easier. Make sure to attach all the bank accounts and the credit card to the tax software so that it will help in keeping regular track of the spending.
Pay for the retirement accounts first
When you are an owner of a small business setup, you have more retirement planning options. Hence, it is better to have access to a traditional IRA just like everyone one else. You can also combine your IRA with the retirement plans. When you are going income-wise, you can lower your tax bill. Contributions to the plans like stacking a 401K cash balance pension can help you deduct some tax. This can be huge when you pass through the entity tax break
You need to deduct your home office
A lot of people who work from home are not willing to take the home office deduction. You need to at least look at it if you qualify for the tax deduction. You may even be surprised how much money you can save. You can see that a car can help you save some money on your taxes.
You should not ignore the auto expenses
When you are using automobiles, you can deduct the auto expenses that you are using for business purposes. You can track the mileage of your car used for the business and can save thousands of dollars worth money. You can simply state you used the car for business. Whatever percentage of the car’s mileage is contributed to the business, you can still apply that percentage of auto expense for the financial year. You can save some amount on the tax after you do this.
Family members in your business
There are always a few downsides of employing the family members in your business but the bright side is that it can help you to clear the retirement accounts quickly so that you can save on the taxes. When your spouse is the director of operations at your firm, the income of yours and your spouse can help you to quickly clear the retirement accounts. A lot of business owners hire their children too. Children always fall into lesser tax brackets and hence when you pay them for work, the tax burden is reduced. Keep in mind that we are not advocating any child labor!
Track all your carryover tax deductions
Here, we mean the deductions for things such as capital losses, net operating losses, home office deduction or even charitable donations. If you do not make those donations or the creditors, they may be carried to the next year. But, these things always have a way of slipping through the cracks which is why you need to make a note of these deductions so that you won’t forget them the following year.
Conclusion
Hence, though small business ownership is hard, you can always take some help from the tips of CEO Julio Gonzalez who can help your business tax preparation. Break the accounting work throughout the year so that you can let the tax software do the major work. Keep these seven things in mind and the whole tax season will be a breeze.