Tax Saving Tips for Small Businesses

As a small business owner, you will be interested in taking all possible measures to reduce business expenses and increase profitability. That is why it’s imperative for you to consider these simple tax- saving tips for small businesses.

Tax–Saving Tips for Small Businesses

· Form an LLC

Small business owners assume that their businesses are too small to be registered as a corporate entity. This is a big mistake. Several types of small businesses can register themselves as LLCs. As a result, they can enjoy several tax benefits, especially under the new tax rules and reduce self-employment taxes.

· Benefit from Tax-Deferred Retirement Plans

Tax-deferred retirement plans are the most effective tax-saving means for small business owners. Under these plans, your earnings won’t be taxed. To take advantage of the expenses that are eligible for tax benefits, you will have to lose the entire amount of cash as an expense. The gains on retirement plans are tax-deferred until distributions are made.

· Claim Home Office Tax Benefits

You can enjoy tax benefits via home office deduction. To be eligible for this type of deduction, you need to meet the relevant IRS requirements. Also, your home office should be used exclusively and regularly for business. That means no other activity can be performed in your home office apart from business operations. So if your kids watch TV in your office, then you won’t qualify for this benefit.

Also, you must do most of your business work from your home office. Even if you perform certain business tasks outside your home office, you may still qualify for the benefits (if the bulk of your business activities are carried out regularly from your home office).

· Hire Independent Contractors

Hiring independent contractors offer a number of tax benefits. For instance, you do not need to to pay Medicare taxes or social security taxes to them. You also do not need to provide employee benefits, such as leave benefits or medical, disability and life insurance.

Using independent contractors also provides flexibility since there’s no need to hire them if their work is not required.

However, you’re required to meet the IRS requirements to classify workers as independent contractors. Failure to do so may result in penalties or even a tax audit.

· Use Apps to Organize Business Trips

Business trips and business-related driving expenses can be used as deductions to reduce your taxes. To find out which trips are deductible, use apps like DriveDollar.

· IRC Section 199A

You can take advantage of this section to enjoy tax benefits. Very few people are aware of this advantage. Taxpayers can enjoy tax deductions of up to 20 percent of net income obtained via business, including professional practice and rental real estate.  

KLB Business Funding believes in supporting small businesses through the best financial solutions. Contact us today for all of your financial needs.

3702 Pratt Avenue Bronx NY 10466
(347) 755-2257
info@klbbusinessfunding.com