Organizations strive for making profits and reduce expenses as much as possible. As tax reduces the net income from any business, organizations look for tax saving strategies. Many small business owners and especially entrepreneurs save tax. Saving tax through manipulation and fraud is a crime, but one can save tax through fair and legitimate ways.
Also read: Advantages of Startups
Help Small Business To Grow With Simple Tax Saving Strategies
Many surveys are conducted by financial and legal advisors about the same question for tax savings. And a list of recommendations is gathered from experts regarding strategies for tax savings.
Following are some main tax saving strategies for a business
Account for Business Losses
Losses are harmful to any business but if incur after necessary care, they can reduce the tax burden of a business. Keeping a track of losses a business incurs during the year is one of the great tax saving strategies. Business losses are deducted from income, resulting in lowering the business’s overall taxable income. This saves a huge amount of money than anything else like making deductions for charity and interest.
Track Your Travelling Cost
Many businesses require traveling again and again in order to expand business and purchase materials. Luckily, travel costs can be written off as long as the primary purpose of your business is business-related. Tax laws in many countries allow traveling and meal costs as a deductible expenses if made purely for business. However, nothing is deductible if the trip is for a personal vacation. Keeping detailed track records can result in great tax saving strategies for a small business.
Consider All Expenses Such as Utilities and Rent Costs
When filing your business tax return, consider all expenses related to business including utilities, rent, internet, etc. Accumulating these expenses can add up a huge amount against taxable income. Accounting for all such expenses can result in acceptable tax saving strategies. Utility bills also include advance taxes, which on the other hand are deductible as it was paid earlier in advance.
Utilize Startup Deductions
Many businesses get tax deductions on startups also known as startup deductions. It is a tax relief given by the government in support of your newly established business. This startup relief is also, on the other hand, a great tax saving strategy for a newly established business. Some small businesses also enjoy tax exemption on materials imported or tax relief on their exports in order to promote export. All these tax relief results in enjoying a fruitful income and also a great tax saving strategy.
Implement HSAs for Employees
One important tax saving strategies for a small business is investing in employee health savings plans. Implementing in HSAs, businesses can reduce future health costs of employees and moreover reduce taxes. Contributions in HSAs are tax-free, plus growth is also tax-free. And when at the time you need to withdraw for medical expenses, the withdrawals are also tax-free. It is a great medical saving and tax saving strategy.
Also read: Strategic Planning for Business
Structure Your Small Business as LLC
Structuring your new business as a Limited Liability Company (LLC) can provide great tax-saving benefits. Such tax benefits include: your small business income is passed to you as the owner, and this can be taxed on a personal income tax rate. You can also save on social security and Medicare taxes. Structuring as LLC results in great tax saving strategies.
Track Every Receipt With Software
Organizing helps keep a track of how much tax a business has already paid. With expense tracking, receipts tracking is also important, this helps businesses track every possible tax deduction made on invoices. Tracking receipts is a tax saving strategy to track taxes already paid and avoid paying double taxation. Tracking hundreds of slips of paper can get tedious, messy, and overwhelming, so small business owners should invest in software. The software keeps every receipt tracked, stored, and organized.