If you’re a business owner, then you already know how crucial tax time is. Since every penny is equal to every drop of hard work, you’ll want to make sure you get the most during tax season. This is the very reason you’re always on the lookout on how to tame your business taxes.
Even if the year has just started, it is vital that you find ways to reduce your tax. This is to ensure that you get to pay less and save more. But what does it take to better manage your taxes so that you can enjoy more savings? Here are some tips you shouldn’t ignore.
Know your tax responsibilities
Every business is unique. You and your competitors may cater to the same demographics and offer the same products and services. However, there are certain things you do differently, making the taxes you pay to be different. Not knowing what types of taxes you need to settle can run you into some serious trouble. If you want to avoid penalties for missed or late tax payments, make sure to check what tax responsibilities you have and settle them on time.
Know the tax credits you qualify for
Tax credits allow business owners like you to directly lower your tax bill. Knowing what tax credits your business qualifies for will allow you to lower your tax total. For instance, your company invests in research and development. You can double-check with a specialty tax services provider, and they can help determine if you can claim R&D tax credits. Staying on top of your tax credits can lead to bigger savings, lower taxes, and better cash flow.
Take advantage of a tax software
Before, one can only manage their taxes by paper. These days, you can choose a tax software to help you accurately prepare and file your taxes online. This helps you save money by not missing any important tax credits and deductions. It can also save your tax professional time and effort by not having to redo your taxes for making an error or two.
Deduct your auto expenses
Do you use your car for business use? Did you know that you can track the percentage of the mileage you use for your business and deduct the car expenses tied to your company? That’s right. Take note that one of your legitimate business expenses includes driving any vehicle for any business purposes. You can calculate this in two ways – the standard mileage allowance and the actual expenses.
Instead of a raise, increase their benefits
How you compensate your employees can also affect your taxes. When you give them a raise, you’re increasing your tax amount per wages. Increasing your staff’s salary can help keep them happy and motivated. However, if you choose to increase their benefits instead, it will have the same effect. A bonus on your part is you don’t need to increase your payment for a number of business taxes.
Hire a family member or two
Hiring your spouse or children will not only help them learn valuable knowledge and skills about the business. This can also help them learn the value of money and reduce your tax burden. While hiring family members has its benefits, you should be mindful of the things to consider when hiring your spouse or children. You’ll want your decision to be beneficial to your business, not the other way around.
Owning and running a business is hard enough. You don’t want to increase your stress by failing your tax responsibilities. By learning some of the best tricks in reducing your tax liabilities, you get to lessen your stress and turn your focus into growing your business.