Taxes can be nerve-wracking if you’re a small business owner. Chances are, you wear numerous hats, so the last thing you want to worry about is handing over more of your hard-earned business revenue to the government. Happily, there’s a multitude of tax-saving strategies to diminish your taxable income this year.
Tax planning is a paramount part of running a prosperous business. Carry on reading for ways to minimize your small business taxes each year.
Hire a trustworthy CPA
At Ahad & Co., our business tax accountant in NYC (CPAs) is reputable and verified. Business taxes involve a whole host of complexities and rules. The last thing you want is to risk bypassing something critical in terms of your taxable account. There’s the potential you could write off a qualifying childcare expense or tap into health savings.
At Ahad & Co, we handle your convoluted tax affairs – our CPA services in NYC offer a free consultation to establish whether we’re the partner you need at your side. We’ll put a strategy in place to sort your taxes correctly, whatever your financial circumstances. As well as making sure you’re paying all that’s due, there are various write-offs you probably aren’t aware of that may reduce your tax bill. The bottom line? CPAs don’t cost you money. They save you money.
Take advantage of Startup deductions
If you only just launched your small business in the past year, you can get your hands on several deductions accessible only to help new companies navigate costly start-up fees. If your overall start-up fees were below $50K, you can deduct a maximum of $5K in start-up fees and another $5K in organization costs.
You can also use a fractional deduction reduced by overage if you spent between $50K and $55K.
Optimize your retirement plan contributions
Utilizing the correct retirement plan will enable the greatest pre-tax contributions. Higher contributions mean higher tax deductions, meaning a lower total tax bill.
The plan you set up the previous year may not be appropriate for your business as it stands now. If you’re a business owner on a seven-figure income still using a Traditional IRA, it’s time to reassess. Even though you have a current 401(k) plan, there’s a chance you may benefit from tweaking the plan to make sure you make the maximum contribution annually. If you need any help in optimizing your retirement plan contributions, contact our team handling the NYC tax planning for assistance.
Deduct your automobile
Small business owners can write off the complete cost of vehicles weighing more than 6,000 pounds, such as light trucks or sedans. In this case, you may be able to write off up to $18,000. But your vehicle must only be used for business-related purposes. Yet, if you use the van or truck half for business reasons and half for personal use, you can take off 50% of the amount.
Account for business losses
Recording business losses is an excellent way to cut your annual taxable expenses. Business losses can be subtracted from revenue, in many situations reducing your company’s total taxable income by hundreds of dollars. Ultimately, this saves you way more money than simply making deductions for things that may be deemed personal, like charitable contributions or home mortgage interest.
Use the correct business entity
Employing the correct business entity for your business industry could drastically enhance your company’s tax efficiency. The majority of business entities have advantages and disadvantages (S-Corp, Sole Proprietor, Partnership, LLC). Contact your local Bronx accounting services to confirm you’re using the right business structure for your company.
Keep up to date on small business tax law changes
If you’re working alongside an accounting pro who specializes in CPA and tax planning (or another tax expert), they will aid in keeping you ahead of the applicable tax law changes that may impact your organization.
While you don’t have to be a tax expert, you need to keep an eye on the headlines about major tax bills or revised tax laws to see how they affect your tax liabilities.
Arrange your small business as a Limited Liability Company (LLC)
If you re-structure your small company as a Limited Liability Company (LLC), you benefit from tax advantages, like the pass-through. Essentially, your business revenue gets passed to you, the owner, and then taxed on a personal income tax rate. What’s more, you save on Social Security and Medicare taxes, plus evade double taxation.
Keep tabs on your travel expenses
You can deduct more than airplane tickets and mileage for your travel costs. Numerous business owners are increasing travel again to revitalize their businesses and broaden their industry knowledge. Luckily, you can wipe out most of your travel expenses so long as the sole purpose of your journey is connected to the business. In addition to airplane tickets, railbus trips, ferries, and car journeys (to and from the airport) are also allowable.
Meals and lodgings are allowable, but they have to be business-related. Accommodation is entirely deductible, as are business meals provided by diners. Nevertheless, nothing is allowable if it’s a vacation in disguise. So, ensure you track your travel expenses so you’ll be able to support your claims should the IRS question them.
Recruit family members to work in your small business
If you want to cut your taxes, appoint family and relatives. The IRS allows a range of options. Did you know? You can even hire your children to safeguard your revenue from taxes. Income paid to your offspring has a lower marginal value. Occasionally, tax is completely disregarded. Should your business be sold under proprietary, your child’s earnings are excused from social security and Medicare taxes. Double-check the wages are acceptable for business purposes. And meanwhile, recruiting a partner cuts taxes, as the earnings won’t be exposed to the Federal Unemployment Tax Act (FUTA). If you like to explore any of these opportunities for your business, get in touch with Ahad&Co’s business consulting in NYC.
With a little sensible planning, you’ll be able to cut your taxable revenue as a small business owner so that you get more money working for you. Just don’t forget to take advantage of our Bronx accounting services to ensure you qualify for the possible savings mentioned here.
Ahad & Co works with a whole raft of customers to fulfill their needs – reach out today if you think we’d be a suitable partner.