Taxes are an unavoidable burden on small business owners, but there are ways they can be reduced through strategic planning.

Staying organized when it comes to receipts and expenses is key to saving money on taxes. Software such as Expensify makes record-keeping simpler while offering insights into possible deductions.

One effective strategy for increasing deductions is making large purchases such as equipment or vehicles before year’s end, to take full advantage of any potential tax breaks.

1. Evaluate Your Business Structure

When it comes to business taxes, the structure of a company is of critical importance. Selecting an ideal legal entity can increase tax efficiency while protecting personal assets and attracting investors – so consultation with a tax accountant should always be sought before making this important decision.

Tax deductions are a key part of tax planning for small businesses. From home office expenses to employee meals, there are various ways in which business costs can be cut while simultaneously lowering tax liabilities. Staying up-to-date with new business tax laws and deductions is vitally important to keeping costs in check while mitigating risk.

Tax accounting firms provide guidance, filing services and peace of mind for small-business leaders. An upfront investment can save a business money over time by taking advantage of all available benefits to reduce its tax liabilities. Schedule a consultation session with one of your local tax professionals now – they’ll ensure maximum credits and deductions while filing accurately!

2. Know Your Deductions

Small business owners can save money when it comes to tax planning by taking advantage of deductions such as home office expenses, mileage for work-related travel and meals, Section 179 equipment deductions and more. By keeping accurate records and using expense tracking functionality (like many accounting software solutions provide), as well as consulting a tax professional regularly on potential deductions they are sure that all eligible deductions have been taken advantage of.

Also, be sure to maintain separate personal and business expenses. Should the IRS audit your business, they’ll look out for any commingled funds in personal bank accounts or credit cards belonging to yourself or family. Finally, invest any excess cash into a simplified employee pension individual retirement account (SEP IRA), which multiple CPAs recommend as a tax-deductable strategy.

3. Delay Payments

Tax planning requires deferring income and accelerating deductions. If your tax bracket will drop due to retirement, unemployment or an expected business reversal next year, postponing income and increasing expenses so as to pay taxes at a reduced rate may make sense.

If you anticipate receiving a significant commission before December 31st, it may be prudent to delay invoicing it until after this date so as to push its income into 2023 (thereby lowering your taxable income for 2023).

Setting up company-sponsored retirement accounts like SEP IRAs and SIMPLE IRAs with this strategy in mind can also be effective. Remembering the IRS mandated quarterly estimated payments is also key – make your payments throughout the year to reduce overall tax liability.

4. Hire a Family Member

Hiring spouses, children or parents as employees can help small businesses reduce their tax burden. However, special rules must be observed in order to take full advantage of any possible tax savings.

Keep in mind that any family member you hire must be considered a bona fide employee, meaning they should perform services that add value for a reasonable wage. An employment contract will help prevent accusations of favoritism as well as protect you against costly IRS citations.

An effective bookkeeping system and employee expense classification are both key elements of business. Engaging professional accounting services can save money by streamlining administrative tasks like payroll taxes and providing valuable financial benchmarks that guide growth of your company. Contact us for more information about our comprehensive small business accounting services.

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