Save Money on Small Business Taxes
If you own a small business you could be overlooking a simple way to save money annually. During tax time, some helpful hints can make a significant difference in your business tax liability so taking the time to see if any of these tips apply to your business can be to your advantage.
Deduct for Driving
If you use your vehicle regularly both personally and professionally and are willing to keep records of when you are using it for business purposes, you may be able to write off vehicle usage during tax time. Calculate the percentage of business-related time you spend in your car and make sure you keep track of gas, mileage, repairs or other maintenance costs to see if any of the expenses qualify for a tax deduction.
Increase Retirement Savings
Many individuals don’t use pre-tax retirement savings to full advantage. If you are a self-employed small business owner, you can increase your pre-tax retirement contributions to reduce your taxable income. By maximizing your contributions up to the legal limit, you can take full advantage of the taxable income reduction. The maximum contribution varies due to factors such as age and income, so make sure you check the current limits before counting on this as a money-saving tip.
Getting Rid of Old Equipment
Equipment that is outdated or poorly functions still could have a value if you sell it. However, writing it off as a loss or as a donation could save you money in the long run. Make sure to run all scenarios before deciding how to unload old small business equipment. Losses are often worth more as a tax deduction than the money you would earn from selling it.
Consider Tax Software
Although many small business professionals use tax accounts, it could be to your advantage to utilize tax software to look for deductions you may have overlooked in the past. Even if you don’t use the software for the actual filing, it can give you a solid overview of what information you need to gather. If you do choose to file using the software, most programs have guarantees and extra protection to keep your tax information safe and accurate.
Owning a small business involves a balance between spending, earning and saving money. Taking the time to research smart decisions you can make during the year can help you save money when it comes time to file your annual taxes.