Tax season is just around the corner now, which means it’s time for you to start thinking about finding some tax savings that could be critical to improving your bottom line. The truth is, any time of year that you start thinking about ways to save on taxes is a good time, although it’s better to do it at the beginning of a tax year, so that you can realize the benefit of a full twelve months of tax savings. In any case, here are some of the best strategies for saving money on business taxes, and many of these should apply to your business. These have all been recommended by expert accountants and business personnel familiar with the many possibilities for saving money on business taxes.
You may not be aware of this, but you can deduct a lot more than airline mileage and airline tickets when it comes to travel expenses. Many entrepreneurs are beginning to extend their traveling activities as a means of re-energizing their businesses and increasing industry knowledge. Fortunately, most of these travel costs can be written off, provided that the main purpose of your travel is related to your business. On top of the airline tickets, transportation to and from your hotel, meals, and accommodations are also deductible, provided they are for business. Be sure to keep all records of the expenses incurred during travel, so you can prove that it was a business-related trip and not a vacation in disguise.
Hire Family Members
This is one of the best ways to reduce your tax profile, and there are a number of options allowed by the IRS for doing this. It’s even possible to hire your children as a shelter from taxes, because income paid to your children will always have a lower marginal rate. Assuming your business is a sole proprietorship, wages given to your children are exempt from Medicare taxes and social security. You can also reduce your taxes by hiring your spouse, since their earnings are not subject to the federal unemployment tax act.
Account for Business Losses
Keeping track of the money you lose throughout the year is another great way to reduce your tax profile. Since business losses are deductible from income, it often happens that your overall taxable income can be lowered by thousands of dollars. This can save you a lot more money than just making itemized deductions, so make sure to keep track of all business losses throughout the year.
Deduct Charitable Contributions
Another great tax deduction is to regularly make charitable contributions to nonprofit organizations in your area. When you consistently donate, you not only realize a tax savings, but it shows that your company is involved with and committed to the community, and it’s a good reflection on the values of your brand. This is valuable public relations for your company, and it can lead to greater customer loyalty and increased word of mouth business. Pick a charity which is in sync with your business mission and your brand’s values, and then pass that information along to all your customers. This will likely result in more business for you, and in the meantime, you’ll end up with a nice tax savings.
Hire a Professional CPA
It’s very important that you have a well-qualified certified public accountant working at your business. There are tons of laws and complicated regulations associated with business taxes, and you might easily overlook a number of them, if you don’t have a professional constantly looking out for them. With a reputable CPA in-house, you should be able to take advantage of all possible tax savings, and make it well worth your while for having hired a solid, reputable professional. Keep in mind that hiring a qualified CPA doesn’t cost you money, it saves you money.
Don’t Overlook Utilities and Rent
It’s easy for some expenses like rent and utilities to get lost in the sauce, when you’re thinking about tax deductions. Expenses like the rent you pay for business space and the utilities necessary to run your operation, might easily be overlooked, and that will cost you money in tax savings. You can even deduct high speed Internet and similar related utilities, as long as they have a direct association with operating your business. Make sure to account for all these expenses, so you can realize the maximum tax savings when the time comes. Having a good accountant working for you will eliminate the possibility of overlooking these important expenses.