Understanding how to reduce taxable income legitimately and avoid pitfalls is important for helping your small business prosper. And because tax season is upon us once again, we offer you 6 tax saving hacks for small owners.
- Keep close tabs on all receipts: Receipts are a verifiable record of how much money you spent throughout the year. And even though keeping tax receipts over an extended period of time may be a hassle, they may be critical in any dispute with the IRS. Therefore, it is well worth it to keep all your receipts and be ready to present them if necessary.
- Deduct your car expenses: Figure out how much you are using your car for work and count this as a deduction. Some people fail to do so when this is one of the most obvious expenses to running a small business.
- Take advantage of penalty relief if you’re eligible: People who fail to file taxes due to circumstances beyond their control – such as when they are misadvised by their tax preparer – may be eligible for penalty relief. This could end up putting cash back into your business.
- Know what tax breaks are available to you: Some of the tax credits that may be available to you as a new business owners include: Work Opportunity Credit, Disabled Access Credit, Alternative Motor Vehicle Credit, et al. Have your accounting department check the tax code to be sure.
- Consider abandoning vs. selling property: When a small business sells property that no longer has value, the government considers it a capital gain. However, you could take an ordinary loss on a property if you abandon it rather than sell it. This way, it will be treated as a capital loss which is fully deductible.
- Restructure your business: One of the key factors in determining how and which taxes your business will have to pay depends on its structure e.g., Limited Liability Company (LLC), sole proprietorship, partnership, etc. And since many small businesses choose to operate as an LLC due to its pass-through entity classification, you may wish to re-examine whether or not this is an option for your company.
Starting a business is a rewarding experience. However, it is important to be aware of the tax implications that small businesses are subject to. And while you may not be able to file taxes through QuickBooks, it can help you better organize your records this tax season. Use our QuickBooks desktop cloud hosting to meet the needs of your clients and to organize your business with greater efficiency. QuickBooks cloud hosting is an asset for most small and mid-sized businesses.