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For a small business owner, taxes may be a source of anxiety. You probably wear a lot of hats, and the last thing you want to do is pay the government more of your hard-earned company profits. As a business owner, you may take advantage of a variety of business tax planning services and tax-saving measures to lower your tax burden. Consider some of the options listed below if you need to minimize your taxable income this year.
- Employ a Member of Your Family
Hiring a family member is one of the finest strategies to decrease taxes for your small business. The Internal Revenue Service (IRS) provides a number of choices, all of which have the ability to protect income from taxes. You may even employ your children to work for you.
Sole proprietorships, for example, are exempt from paying social security and Medicare taxes on a child’s salary, as well as the Federal Unemployment Tax Act (FUTA) tax. It is critical to emphasize that earnings must be derived from legitimate business activities. The IRS also permits small company owners to save money on taxes by employing their spouse, who is not subject to the FUTA tax.
- Make A Retirement Plan Now.
As a small company owner, you forego an employer-matched 401(k) match. There are, however, a number of retirement account alternatives that can help you optimize your retirement savings while also providing substantial tax benefits.
- A Roth IRA
- Simplified Employee Pension Plan (SEP) IRA
As a tax-saving technique, the IRS website offers a number of retirement plan alternatives for company owners.
- Save Money For Medical Expenses.
Putting money away for healthcare expenses is one of the best methods to lower small company taxes. Medical prices are rising, and even if you are currently healthy, saving money for unexpected or future healthcare requirements is critical. If you have a high-deductible health plan that qualifies, you can do so using a Health Savings Account (HSA).
- Change The Way You Do Business.
You don’t have the benefit of an employer paying a percentage of your taxes as a small company owner. You’re responsible for paying all Social Security and Medicare taxes. You must still pay such taxes if your firm is taxed as a limited liability corporation (LLC), however in some cases you may be able to eliminate the employer-half of those two tax responsibilities45. For some small firms, this might be a good decision. While there are several factors to consider before making this step, including paying oneself a decent income and other dangers, it can be an excellent strategy to lower your taxable liability.
- Travel Expenses Are Deducted.
You may be able to lower your company taxes if you travel frequently. While business travel is entirely deductible, personal travel is not. Small company owners, on the other hand, can mix personal travel with a justified business reason to optimize their business travel. Business-related frequent flier points can be used for personal travel at a later date.
As a small company owner, you may lower your taxable income and keep more of your money working for you by planning ahead. Just make sure to check with a tax professional for tax planning services in SC to see whether you qualify for the savings mentioned here.