Tax season can be a real headache for small business owners, but with some smart strategies, you can lighten your tax load and keep more cash in your pocket. Check out these 10 practical tips to save on taxes.
1. Keep Track of Business Deductions
Make sure to log all your business expenses like office supplies, travel costs, marketing, and software subscriptions. Deductions can lower your taxable income and reduce what you owe.
2. Use the Section 179 Deduction
You can deduct the full cost of qualifying equipment and software in the year you buy it, rather than spreading it out over several years.
3. Separate Your Business and Personal Expenses
Having a dedicated business bank account and credit card makes it easier to track your expenses, helps you avoid issues with the IRS, and maximizes your deductions.
4. Take Advantage of the Qualified Business Income (QBI) Deduction
If you’re eligible, you can deduct up to 20% of your qualified business income, which can significantly lower your taxable income.
5. Contribute to Retirement Accounts
Putting money into a SEP IRA, SIMPLE IRA, or solo 401(k) not only helps you save for retirement but also reduces your taxable income.
6. Hire Family Members
Bringing family members on board can be a great way to keep income within the family while benefiting from tax savings on their wages.
7. Claim the Home Office Deduction
If you use part of your home for business, you might qualify for deductions on rent, utilities, and other related costs.
8. Deduct Vehicle Expenses
Keep track of your business mileage and vehicle expenses. You can choose between the standard mileage rate or actual expenses to maximize your savings.
9. Plan for Estimated Tax Payments
To avoid penalties from the IRS, make quarterly estimated tax payments. This helps you manage your tax liability and prevents a big bill at the end of the year.
10. Get Help from a Tax Professional
A tax pro can help you identify deductions and strategies that you might not be aware of, ensuring you get the most out of your tax situation.
Small business owners can cut down on their tax bills and boost their financial well-being by using these tax-saving strategies. Being proactive with tax planning helps you make the most of all the deductions and credits out there. If you need expert guidance to optimize your tax strategy and maximize savings, Clever Profits offers tailored financial services to help you stay compliant and profitable. Contact us today to learn more.
The Clever Writing Team
The CleverProfits writing team includes various team members in Advisory, Financial Strategy, Tax, and Leadership. Our goal is to provide relevant and easy-to-understand financial content to help founders and business leaders reach their true potential.
