Finding ways to control costs is an important task for any business, no matter how big or small it is. That said, small businesses need to stay on top of their business expenses since they often have less wiggle room to work with before those costs start to eat into their profits too much. One way small businesses can reduce their expenses is to use strategies that reduce their taxes.
Take Deductions
Tax deductions are a great way to reduce your taxable income. Tax deductions are designed to allow you to keep more money for your business. That gives you a better chance to grow, maximize your profits, and reinvest in your business in all sorts of ways.
There are many business expenses you can deduct from the money your business brings in. You could deduct a portion of the cost of food and drink for business meals, work-related travel expenses and car use, business insurance, office supplies, and more.
Choosing the Right Structure
Before you officially got your business up and running, you had to decide how you wanted to structure it. Common small business structures include sole proprietorships, LLCs, partnerships, corporations, and S corporations. Which structure you choose impacts how your business is taxed. For example, an S-corp helps you reduce the amount of FICA taxes you have to pay.
Structuring as a sole proprietorship allows you to deduct the cost of health insurance for yourself, your spouse, and any dependents you may have even if you don’t itemize your deductions on your return. Consider which structure will be most advantageous for your business and weigh the advantages and disadvantages of restructuring if necessary.
Invest in Professional Tax Services
If you’ve ever tried doing taxes for your business on your own, you know how quickly that becomes overwhelming. Save yourself time, money, and trouble by finding a good tax professional to handle your business’s tax returns. As a professional, they’ll be experts at finding ways to reduce your tax liability. They may find ways to save that you haven’t considered before and offer insight on how to reduce your tax liability further in the future.
Paying taxes matters regardless of whether you’re paying as an individual or a business. No one should pay more than is necessary though, including businesses. Use strategies that help you reduce your tax liability so you can retain more of your money and invest it back into your business. That’s one of the best things you can do to help your business succeed.
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