5 Legitimate Ways To Reduce Your Small Business Taxes

1. 5 Legitimate Ways To Reduce Your Small Business Taxes

2. Able to advise you on a number of different strategic ways to reduce your small business taxes, a tax preparation expert or accountant is a vital component of a financially healthy company. And if, as a business owner, you’re seeking ways to lower your tax liability and access all the deductions, credits and tax exemptions that may be available to you, a tax professional will likely present you with at least these 5 legitimate ways to do exactly that: • Understand what you’re legally able to deduct To make sure you don’t miss out on money that might be owing to you, your tax professional will explore the following business deductions to help you limit your tax liability:

3. Mileage and related expenses for vehicles you personally own used for business purposes • Bills of cell phones used for business purposes • Operational costs related to businesses functioning in your home (a part of your mortgage or rent, for example) • Half of all expenses related to meals and entertainment carried out with current or potential investors, employees, partners, clients and contractors • Business equipment purchasing costs, like monitors, computers and printers etc. • Bank fees • Costs related to retirement plan contributions • Costs related to health savings and insurance premiums for the self-employed

4. 2. Invest and buy strategically By planning what you might need to buy for your business at the beginning of the year - from equipment to services etc. - and timing those purchases strategically, you could lower your tax liability either in the existing, or following year. Purchases bought in the same year, may help you gain a tax deduction in the existing year, while if you haven’t made so much money in a year and are expected to have a higher taxable income the next year, it may be wise to postpone making any major investments in services or equipment until the first of January, at least. Ultimately, you should be matching all expenses that qualify for deductions, to years when your income is higher so that you’re more effectively able to offset your taxable income.

5. 3. Make the distinction between cash flow taxes and deductions Many business owners believe that both cash inflow and outflow are automatically classed as taxable income, when the reality is that it’s their exact nature which determines whether they are taxable, or deductible. In much the same way, business owners tend to make the assumption that all deposits are classed as income, when this isn’t always true. If you’re not sure about this, a qualified accountant or bookkeeper will help you make the distinction.

6. 4. Reinvest earned money into your employees A great way of lowering your taxable income as a business owner, is to take any money that you’ve earned, and reinvest it back into your employees. This is a win-win situation, as you reduce your tax burden while at the same time, helping your employees be more successful. Provided they fit the following criteria, wages, salaries bonuses and other types of compensation paid to employees, may be tax deductible:

7. Compensation isn’t out of the ordinary and is entirely necessary • They are of an amount considered to be reasonable • The services paid for were provided • They were paid to an employee in the current year Also tax-deductible are any contributions employers make to retirement accounts, provided they don’t go beyond the limitations outlined in the IRS Code Section 404. To get more details regarding this, consult with a qualified accountant.

8. 5. Take on members of your family It might be worth paying those members of your family who work with you in your business, so that they can contribute personally to Social Security if adults, and if children, thanks to their lower tax bracket, help you reduce your overall tax burden. Without a tax professional to guide you, some deductions may remain elusive, but with their advice, you could start reducing your small business taxes right away.

9. At Heyer Inc, we proactively assist our individual and small business clients in meeting their goals. Our key area of focus is ensuring that our clients remain compliant with federal and state tax laws by providing them with high quality accounting and tax services Miami. If you are looking for an individual accountant in Miami, heyer inc would be a right option.