About 93 % of the small business owners have paid taxes higher than required, based on a recent survey. According to the small business owners, owning a small business is an expensive affair. Also the situation becomes more severe, as they have to pay higher taxes.
In this article, we are going to discuss the ways to increase your tax savings and reduce your payable tax. Some of the key ways to reduce the payable taxes are mentioned below:
1) Utilize the tax filing software
By utilizing the tax filing software, the small business can end up in paying lower taxes. They will be completely protected, while utilizing the tax filing software. The common taxpaying software will ensure that accurate tax filing is done in an online form. They will ensure that maximum refunds are obtained. They will ensure that maximum refunds are obtained as well as minimum penalties as well as charges are incurred.
2) Try to keep the “close tabs” on all the receipts
The financial dashboard is maintained by the collection of receipts and it has the information, how the money is spent throughout the year. There are many receipts, which are for goods and services, which can be deducted from the payable tax. Thus, maintaining receipts properly will help you in lowering your payable tax. It is however not possible to keep the receipts of complete year as keeping and maintaining paper receipts, is a little difficult.
There are various software available, which all can be utilized to maintain all the receipts in the soft form. The receipts can be imported in the image format and can be uploaded accordingly.
3) Pay now for the retirement and get a payoff later
The worker, who is self employed can reduce the taxable income by providing an additional amount towards the retirement account. This money is not taxed till the money is withdrawn in the retirement.
You can decide this amount on the basis of the cash flow and this is the component which pays you both now as well as later.
4) Deduct your expenses of the home office.
There are many business owners, who work from the offices at home and they can deduct the expenses related to the home office. This can include the mortgage interest payments, insurance, repairs as well as utilities like internet service. This type of deductions can benefit both the home workers as well as people who have rented an office.
5) Deduct the car expenses.
One can deduct the car expenses that one has put on the business. There are standard mileage rates available for the car models, to calculate the same. This will include the fuel, repairs as well as insurance of the car. So take care before filing the returns and include it to get the maximum benefits.
6) Add the deductions related to the business equipments
There is a provision that you can get the deductions of the business equipments. The business equipments will include anything that is required to run the business. Some of the key items are furniture, some industrial equipments as well as computer systems.
7) Hire the family workers to work with you
You can try to hire some of your family members in your business. This will reduce your overall expanses and you don’t have to pay the family member a salary. This will reduce your taxable income and will increase your tax savings.
Thus, we have seen various ways, in which the small business owners can reduce their tax liabilities. The small business owners can take the benefits from the information mentioned in this article and can save their tax considerably.