8 Best Ways to Cut Your Tax Bill if You’re a Small Business Owner

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So most private entrepreneurs deal with hardship and struggle to get a good market position. But running a small business is even more pricey when you’re paying more taxes than you ought to.

Noone expects business owners to be tax experts as you do have a business to handle. But it’s crucial to know how to save up and use that money to build your business. 

1. Get proper accounting software

This is crucial for preparing your taxes right if you’re a small business owner or a small entrepreneur. Tax accounting software is able to provide tax protection that you may not be able to afford in any other way.

Tax filling programs can help you prepare and file your tax return online. Most of these programs can accurately back up all your tax paperwork and provide the best tax returns. With this level of efficiency, the accounting software can make tax season significantly easier. 

2. Start to invest in your retirement 

A self-employed income tax can be lowered by investing extra money into a retirement account.  These finances will not be taxed until the money is withdrawn at the time of retirement.  You can contribute up to $5,500 to a traditional or Roth IRA if you’re not older than 50. If you’re older than that, you can subsidize up to $6,500 into your retirement account.

3. Deduct your vehicle expenses

Deduction of your vehicle expenses is an ideal strategy to decrease your taxes. When deducting your expenses, determine how much has your car being used for work. Then just add that rate to your total vehicle expenses.

There are two ways of car expenses tax deduction. One includes the IRS’s standard mileage rate, and the other one is based on your real car expenses, including maintenance, insurance, and fuel. To save up as much as you can, you should determine which one is most beneficial for you and stick with it.

4. Hire a professional accountant

Tax preparation is not an easy thing. Calculating your annual tax and preparing a tax return can be a hard task for you. Hire a professional accountant that will help you manage this by doing all the work for you. Sarasota CPA Firm will help you follow all the rules of small business taxation and will make sure that you pay just the right amount of tax. A reputable accounting firm will help you choose the best way of minimizing your taxes. Don’t neglect this opportunity as it can save up a large sum of money for you. The money that you can later invest in building your business.

5. Invest in your and your family’s health

Health insurance and regular examinations take a large portion of your expenses. If you’re investing money in any of them, you can count on a large tax deduction. There are other ways to deduct your medical expenses. For example, if you have family members who are dependent, disabled or are suffering from a major injury or illness and your paying for their treatment. 

6. Deduct your home office

If you have your office at home, you can save up by deducting your home office expenses. This means that if you have maintenance, mortgage, insurance, and internet expenses, you can deduct all of them. You just have to calculate what percentage of your home is being used as an office. The accounting software can help you out here. It doesn’t matter if you own a house or rent it. Both owners and renters can save up a pretty sum of money with the help of this deduction.

7. Pay attention to carryovers

Some deduction options may not be fully utilized during a single tax year and can be transferred into the next one. The list includes capital losses, net operating losses, home office and charity deductions. Try to use them all when preparing your taxes.  

8. Use penalty relief If you’re eligible

In some cases, you may be faced with an IRS penalty. If so, you need to determine whether you can get penalty relief. Some of them, such as penalties for failing to submit a personal tax return or to pay before the deadline, are suited for penalty relief. You’re allowed to have relief if you tried to follow the legal conditions but were incapable to do so due to uncontrolled circumstances. Or if you were able to deal with an issue stated in your penalty notice. It’s not always working out but it’s worth trying for relief to return your money back.

The bottom line

There’s no need to make it even more complicated for yourself. The best way to save up is to keep an eye out for deductions throughout the year and choose the best option available. Finding alternatives of which you didn’t know previously is a sure way to save up and invest that money in your business.