Today we are going to talk about taxes and your small business.
Every small business owner worries about paying taxes and looks for ways of reducing their tax burden.
When you have a small business of your own you must keep up date on your knowledge of tax laws that pertain to “small businesses.” You must also clearly understand accounting systems and tax planning.
The best place to start is to sit down with your accountant and plan the different ways that you”ll maintain business expenses, filing receipts, “tax saving” investments, and a strategy for running your business in the most beneficial way.
Consider the following points:
* According to law you can reduce your tax liability by hiring family members to carry out work in your business. Pay your children and spouse to perform assigned duties. This way you can shift from higher tax rates to lower ones.
* If you hire independent contractors instead of employees, you”ll save on payroll taxes. However ensure that you meet the IRS’s criteria.
* You can take advantage of tax deductions allowed for charitable donations. Make donations in November or December instead of January so that you can include the donations for tax deductions in the current year.
* You can maximize your expenditure on equipment and office supplies. Buy in advance for a quarter and use the tax deductions allowed in the current fiscal year.
* Pay all bills due before the end of the year. Payment to cell services, rent, insurance, and utilities related to the business can be included for accounting and applicable tax casino online waivers.
* Set up a retirement plan and make payments before the end of the year. This will reduce your income for the year and proportionately the tax due. Be sure to check on the limits. Plan a feasible and beneficial strategy with your accountant.
* Be sure to deduct from your taxable income money paid to licensing fees, businesses taxes, and annual memberships to businesses related organizations. Be sure to deduct interest paid on borrowings for running the business and related fees. Insurance premiums paid to insure the business office and machinery are eligible for tax deductions. Make a list of your memberships and check which ones are eligible for tax deductions.
* Check whether you have deducted management and administration expenses as well as money spent on maintenance and repairs of equipment.
Decide whether you should use a cash accounting system or accrual one Which one will benefit your business the most? Keep in mind that the tax deductions are different depending on the system you use.
When setting up your small business it”s wise to seek out the advice of a tax and accounting professional as to which accounting system would be most suitable.
Look for Part 5 in one week.
We”ll be talking about some common mistakes that small business owners make, so you can avoid making them yourself.