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Is Your Small Business Getting Taxed by High Costs?

By: Outright

 

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You’ve probably heard it said that only two things are certain in life: Death and taxes.

As a small business owner, would you like to be certain that at the very least you are not paying more tax than necessary, and that you’re making all the tax savings you can? Read on for top tips on how to lower your small business taxes for the next tax season.
Be Organized
The top tip for lowering your small business taxes is very simple. Be organized. Before you start reading about tax laws and picking over the finer points, do yourself a favor and start by being super organized:
  • Keep records of all incomings and outgoings;
  • Keep receipts for everything neatly filed
  • Keep up to date with your paperwork
  • If you use a premises or vehicle for both business and personal use, keep a separate log for the business use.

Know What You Can Deduct

Small businesses often cost themselves money simply by not knowing which expenses can be deducted for tax purposes. In general, all business expenses can be offset against tax. This includes:
  • Start up costs
  • Office expenses
  • Phone and internet
  • Travel
  • Business related education
  • Insurance
  • Professional memberships
  • Meeting expenses

It’s the worth the time spent looking into what you can deduct now, so you can save in the future. It may well be worth employing a professional to help you with current tax laws, what you can deduct, and keeping yourself organized and up to date. You will want to weigh up whether the fee you will pay them will be recovered in the amount of tax they can save you.

Invest Now
If you are thinking of buying office equipment or any other physical resources for your business, consider buying them before the year’s end. Items bought before the year’s end can be offset against that year’s income, meaning future savings for you in the next tax season.
Pay Your Bills Now
The same principle applies to your bills. If you have bills due in January, consider paying them in December. This means the amount you pay out will count as money that was spent in the current year. This will effectively lower your overall profit and save you money on tax.
Invoice Your Clients Later
On the other hand, if you have bills to send out in December, consider posting them just a few days later. This way, the money will come in after the end of the current year, and will not be counted towards your profits for that year.
Start A 401K
Starting a 401K retirement plan for yourself and your employees is a smart way to save on tax: you don’t pay tax on any investment you make in a 401K until you start withdrawing the money when you retire. This can be an effective way to defer paying taxes on those amounts, while also saving for a more secure future for yourself and your staff.
Give To A Good Cause
The IRS offers many tax incentives for charitable giving. Take the time to look into what tax breaks are available for charitable giving, and consider taking advantage of them. You’ll be saving yourself money while giving to a good cause, and showing your business’s sense of social responsibility. Tax season can be one of the most stressful parts of the year for small business owners, but with careful planning and preparation you can make it easier and save yourself money too when 2014 rolls around.
This article was originally published by Outright
Published: August 6, 2013
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