Sadly, the vast majority of small business owners overpay their taxes by overlooking deductions that they’re eligible for or structuring and managing their companies in a manner that isn’t tax-efficient. To help you avoid those common mistakes, here are five easy ways to reduce your business taxes:
1. Hire A Family Member
It may seem somewhat old-fashioned but turning your company into a family business could provide you with tangible tax benefits. It’s a little-known fact that you’re legally allowed to hire your own children as long as they’re at least seven-years-old. For most families, that would be the easiest route, but if you don’t have kids, you could probably find help from one of your parents, grandparents, aunts, uncles, cousins, or siblings. According to Financial Planning Services Company – TrustPoint, investing in a family business is one of the best moves you can make as a budding entrepreneur.
2. Stash Funds In A Retirement Account
Opening a retirement account is not only simple it’s also a wise decision in general. Talk to your banking provider about opening a 401(k) account, as it will allow you to put away up to $53,000 of your income for retirement through investment vehicles like simple IRAs and SEP IRAs.
3. Open A Health Savings Account
Did you know you can take some of your income and put it aside for future healthcare expenses and the IRS will not tax you on those funds? It’s called a Health Savings Account (HSA) and it’s available to people who have a high-deductible health insurance plan.
4. File Travel Expenses As Deductions
This one is self-explanatory. Go somewhere and then file the travel expenses as a deduction. The only requirement is that the travel must be achieving a purpose for the business. So, for example, you could go to Hawaii to hold a business meeting and then deduct the cost of the trip from your tax liability.
5. File A Deduction For Equipment Purchases
Another self-explanatory yet must-do method of simplistically reducing tax liability – buy stuff that you will use to run the business and file the cost as a deduction. This could include computer equipment, tools, office supplies, and anything else that the company needs to continue operating.
All Of The Above Steps Are Extremely Simple
If you review each of the recommendations above, you’ll see that none of them will require more than an hour or two of your time. Most people can find a family member who’s willing to work with them on a part-time basis in a single day by making a few phone calls. Likewise, the account-opening process for a retirement account or HSA can be completed online in less than 30 minutes.
Of course, you’re probably going to want to do some traveling anyway, so that’s a given. Plus, why would you not want to buy equipment for your business? In any case, you might as well use your investments to lower your business tax liability.
How To Reduce Your Tax Liability On Your Home Business
Running a home business is a wonderful way to spend more time at home. You’ll ne. to work hard to make it profitable, and that, where many people often fail. Are you interest. in launching your own successful home business? Start reading to find out expert tips and tricks on starting out right with your new business.
You will have to justify anything that you write off, so make sure you keep good notes on business-relat. expenses. By tracking your expenses, you will make it easier to find those that do not qualify as a write-off. Make sure all the items you claim are used for your business.
Time management is key. This is a skill that you must cultivate if you do not already have it – operating a home business takes a lot of your time. You ne. to include trips for supplies and other items in your daily schedule.
Develop your own inspirational vision board using photographs that help you visualize what goals you are working towards. Throw in items you, like to purchase with your home business profits. or if you’re after paying off big bills. put images of the items you are paying off on there. Put anything you love or want on your board.)
Make sure that your business phone line is separate from your private one. You do not want to take the risk of your business phone being answered unprofessionally and it should have a business specific message on the voice mail.
As you’re your own boss, give yourself a good work schedule so you won’t slack off as much at home. Your customers deserve your d.ication and hard work even though you may not have to leave the house.
You should set daily goals for yourself. You will accomplish a lot more if you establish reasonable goals on a daily basis. Set boundaries to work at home so that family can respect your work time.
Let visitors to your website know where they can make a purchase. Announce the stores or websites that carry your products. With easy access to your products. you will build trust and respect with your customers.