Five Tax-Saving Tips For Small Businesses
Small business owners know best that every penny counts in its day-to-day operations. In adopting that philosophy, your ability to minimize taxes could be one of the primary factors in managing a profitable business versus one that is just barely getting by.
Sure, taxes take time. We understand that. However, it’s important to invest just a little bit of time in your taxes in order to ensure that you’re putting as much money as possible back into your pockets. Ultimately, it’s not how much you make, but rather how much you save.
CBS Business Consultants have generated the following five tax-saving tips for small business owners.
Utilize Tax Software
There is no doubt that using tax software to your advantage should be a no-brainer for small business owners. Not only will software programs such as Turbo Tax make completing your taxes easier, it will actually save your business a great deal of money as well.
In this day and age, don’t be afraid to veer away from paper and pencil tax preparation. According to the IRS, errors occur in less than one percent of online tax returns. That number is much higher with paper returns.
Track Your Spending
While tracking your spending may seem like a daunting task, it is of utmost importance. There are many credit card companies that will provide you with a “year in review” while laying out all of your transactions. Convenient, right?
Yes, online banking is easy and relatively seamless. However, there is still room for error. Consider using helpful software such as Quickbooks or Quicken. This will allow you to exploit all deductible expenses.
Fund Your Retirement Accounts First
Think about all of the retirement planning options that self-employers have. As a small business owner, you’ll have access to a Traditional IRA, SEP IRA and a 401(k). With this, you’ll be able to sock away as much as 55k per year. Taking this a step further – with a 401(k) Cash Balance Pension, you could potentially save up to 150k annually.
Contributions to these plans are tax shelters and these deductions will significantly lower your tax bill.
Use Your Home Office to Your Advantage
Do not be afraid to deduct your home office from your taxes. If you work from home, it’s at least worth looking into as it can really save you a large sum of money.
Include Your Auto Expenses
Whether or not you are aware of this, you’re allowed to deduct auto expenses when you car is used for business purposes. Consider what percentage of your car’s mileage is used for business purposes; you can apply these auto expenses to your taxes.