There are very few business owners who don’t have just a touch of animosity of the taxman, we all know it. However, there might be some legitimacy to your concerns if you think that you’re getting taxed too much on your business. Here, we’re going to look at the ways to make sure you’re paying your fair share (and no more) and how to make sure you stay safe as you do it.
Start by deferring your income
If your tax due date is in January, then the first thing you should consider doing is deferring your income. Any income you make following December 31 is officially income for the next year. As such, by deferring it, you can genuinely reduce your tax bill for the year by a sizeable chunk. However, this does mean that the income added to next year will increase your taxes for the next year, so it’s not a tactic you should get too used to relying on.
Get to know your deductions well
There are all kinds of business expenses that you could be able to recoup from your taxes. Which expenses can be deducted will change depending on where the business is based, so it’s important to do your research but things like office equipment, digital technology, and even things like a company car can all be deducted. If you’re running a home business, you might need to figure out how much an expense is for business (is it 50% business, 50% personal, for instance) to find out how much to deduct, as shown at Turbotax by Intuit.
Make sure you have a pro on your side
There are various other strategies to help you reduce your overall tax burden for the year, but you should be careful as, even if you’re doing so legitimately, you can end up triggering red flags that could lead to a time-consuming and expensive audit. For that reason, getting tax advice from teams like the Law Office of Stanton D. Goldberg should be essential. You can get some advice on how you’re handling the IRS and get help if you end up getting into any hot water.
Prepare well in advance
As well as looking to save money, you should be making sure that you have money to pay the taxes that you’re likely to owe. For that reason, it’s a good idea to (once you know how much you’re getting taxed) apply that to the years ahead. Keep detailed notes of your income and spending, and you can track how much you are likely to get taxed by the end of the year. This way, you have more time to set aside the money that you’re likely to need to pay it off.
If you’re running a small business, you’re more likely to end up paying more taxes than you would if you were simply employed. That’s the harsh truth of the matter. Though, hopefully, the tips above can ensure you’re not getting stung too hard.