There are only two certainties in life – Death and Taxes. Taxes, however can be managed. There are a few tax advantages that small business owners don’t take benefit from or they simply don’t know about. There are also some deductions that you can avoid, but don’t due to misguided information about taxation.
Enlisted below are 5 tips that can help your small business:
TRACK YOUR EXPENDITURE
Keep a track of every single dime you pay, even the ones you for which you are paying out of your own pocket. Get everything on your accounting records and make a proper account for this. Do not include credit card transaction because they are counted in shareholder contributions.
THINK OF THE FUTURE
Your business is a loop you get involved in but a loop you don’t ever get out of. People are so busy they never think what they will do after they retire. There has to be some money safeguarded. There are many retirement plans available which allow you to put aside some funds without tax deductions to save for your retirement. Contact your financial advisor to discuss retirement plans.
There is no simple way to put it, do not mix both your personal and company expenditure. Personal expenditures are not tax deductible. You are definitely smarter than this.
Expenditure of purchase of 1 big asset is allowed in the first year. Barring certain qualifications, this is approved by IRS. Using this, you can reduce your income which is taxable to 0, this income can be a maximum of 500,000 $.
Avoidance of all Money leaks
In a small scale business one common problem is money leaks, hence you sometimes get behind when it comes to payment of your bills. While this is not a major issue for a local vendor, IRS does not give any considerations in this, you will be penalized in the form of interest and penalties. Pay your taxes within the time limit and use your funds on deductible expenses.