Welcome to Tax Season – a time of taxing stress on individuals and businesses alike. For the budding entrepreneur running a successful small business, tax season presents opportunities to gain a competitive advantage over others by legally paying less taxes. How? Let’s find out…
A common tax advice for small business founders is to actually dedicate some time and energy towards their tax liabilities, and plan ahead to meet them. While it might be difficult to see hard-earned profits leave your bank account – profits that could’ve been used to gain an advantage over competitors – you’re missing out on the very real and legal way of saving on taxes. By educating yourself about these approaches, you’re sure to gain the advantage you desire, all within legal boundaries.
Introducing – Deductibles! Tax deductibles are expenses that businesses can subtract from their taxable income, ultimately reducing the amount owed to the government. To put it simply – if your business makes a purchase, it might just be eligible to pay no tax on it. However, figuring out exactly what counts as a deductible is necessary. You cannot deduct taxes on every single possible purchase. For the IRS – deductible is that which is ordinarily an industry standard requirement and necessary for the health and functioning of the business.
1. Accounting Related Fees
The people who are responsible for the financial health of your company may just be available to you tax-free. Any fees that you pay to accountants, bookkeepers, and accounting software are fully deductible!
2. Business Credit Card Annual Fee
Day-to-day operations may require many purchases, which in turn are powered by credit cards. While the credit cards themself do not come free, the annual renewal fee associated with them does come tax-free.
3. Interest on Business Loans and Mortgage
To make money you must spend money. If your organization has undertaken financing for new equipment or property, it’s important to know that the interest paid is completely tax-free!
Now that you’re aware of the various deductibles available to your business – you must track them. However, this again requires time and energy from your end. Additionally, any error in tax planning may swiftly be responded to by an official IRS notice. As such, it’s a worthwhile investment to partner with expert tax advisors. These organizations have gained domain expertise in taxes, and thus effectively help you with your tax planning needs!
Conclusion
In conclusion, understanding and utilizing tax deductibles can significantly ease the financial burden on your small business, allowing you to reinvest saved money back into your operations. Deductions for accounting fees, credit card annual fees, and interest on business loans and mortgages are just a few examples of the many ways you can legally reduce your tax liability. By staying informed and planning ahead, you not only ensure compliance with tax regulations but also give your business a competitive edge. Partnering with expert tax advisors can further streamline this process, ensuring you maximize your deductions and minimize errors. As tax season approaches, take the time to educate yourself on these opportunities and seek professional guidance to make the most of your deductibles.
