Are you concerned that your small business is paying too much in taxes? You aren’t alone. According to reports, 52% of small business owners believe they spend too much on taxes.
If you have a small business, there are a few things you should know when you’re paying taxes to minimize how much you spend. Keep reading to learn four small business tax tips that will help you save some money.
Form the Right Entity
You have your options when it comes to filing your business paperwork with the government. If you work on your own, you can work as a sole proprietor or an LLC. If you plan on running a more extensive operation, then a corporation will be what you need.
Each one of these structures has its pros and cons when it comes to taxes. Investigate each of them to figure out which one will help you save the most on business taxes.
Keep Your Finances Separate
If you’re just starting your small business, it’s tempting to run it out of your personal bank account. While this might make things easier short-term, it can create a hassle when tax season arrives.
You’ll need to justify every expense you make if the IRS ever audits your company. If you mix your personal and business finances, this process becomes much more difficult. Separate your finances from the beginning, and it will help you categorize and justify your income and expenses.
Know Your Tax Breaks
You might be used to the standard deduction when you file your individual taxes. It’s easy and means you don’t have to list a bunch of little deductions. With a small business, you have more options for tax breaks available to you.
You can deduct anything you purchase as a business expense on your taxes. A business is only taxed on their net profit, so keep track of these expenses during your tax strategy planning sessions.
There are also various deductions available outside of standard business purchases. These deductions can vary based on your industry, so work with an accountant to figure out which special deductions your business qualifies for.
Get a Consultation
It’s hard for someone without experience in taxes to understand everything there is about the tax code. Even if you can get your taxes filed without any errors, that doesn’t mean you aren’t paying more than you need to the government. If you want to save the most during tax time, get in touch with a professional accountant.
You don’t need to hire someone full-time for this job. A consultation a few times per year will help you stay on top of your finances. If you find a great accountant, you can even save more money in taxes than you pay in accounting fees.
There Are More Small Business Tax Tips Out There
You need all the cash you can get when operating your small business, so it pays to learn how to pay less in taxes. The above small business tax tips are only the start, so make sure you do your research and reduce your taxes as much as you’re legally allowed.
If you enjoyed the tips above, head back to our blog. Our latest posts have more great tips that will help make running your company easier.