There are various ways that business owners can save money on taxes. Knowing how can translate into an improved net income after taxes.
Don’t forget about loss carryforward.
A losing year in business is bad for everyone involved. However, a tax law can turn this bane into a future financial boon. This tax law allows a loss in one year to be a tax deduction in the next year. Supposing your business loses $100,000 in 2017 and it earns $200,000 in 2018, then the taxable income for 2018 will only be $100,000.
Avoid cramming for taxes.
A hasty tax preparation can make one liable for errors. Some businesses rush theirs and thus make costly mistakes in their reports. The best set-up is to find time each month to organize papers and documents related to taxes in one secure place instead of gathering them and sorting them out once a year when taxes are almost due.
Keep all of your receipts. And keep them organized!
This previous tip only works if you follow this lesson. There are tax deductions for using gasoline for car trips and spending for lunch or dinner as long as they are business-related. If they are, then keep the receipt right away in a marked folder or container for easy access once you prepare for taxes.
Use the section 179 for deduction.
Property and equipment can be deductible over time. But don’t wait. In section 179, a depreciable property can be deductible if noted as a business expense. The rule is that property must be entered in the tax filing the year it was purchased. Also, check the IRS whether your property qualifies before entering it as such.
Avoid penalty. File and pay when or before taxes are due.
IRS will penalize people for not filing and paying on time. If you find yourself in trouble keeping the tax deadlines, then you might just have to outsource a tax expert keep you organized.
Do not store useless but taxable property. Donate them instead.
There might be equipment that a business owner has stored elsewhere because they are no longer useful in the operations. Or, you might have bought a new computer to replace an old, clunky one. Instead of tossing it aside, donate it to a school or a foundation. This donation helps others but also counts as a tax deduction.
Hire a tax professional.
All of your tax concerns might be eradicated by hiring someone who knows taxes well, like a tax accountant. It’s an additional expense but might prove invaluable in the long run. The business owner can now spend his time on his business alone minus the burden of tax worries.
Having mentioned all the reasons, you might want to check out MKS&H who has an impressive track record in tax preparation and filing for business owners. Beyond that, their team can also be your representative with the IRS.