Especially for small businesses, every dollar counts in running your company and creating the structure needed to turn a significant profit. This makes taxes a frustrating and even painful part of your business expenditure. So, here are a few ways your small business can actually reduce its taxes!
Deduct Your Expenses
First thing’s first, make sure that you take advantage of every tax deduction possible. You might be surprised at the number of expenses you can deduct in your taxes! From business meals and networking efforts to insurance, transportation, outsourcing, advertising, education or certification, and upgrades in technology or office necessities, most things that you need to run a business can provide you with some sort of deduction. Anything that improves or boosts the profitability of your business is likely something you can “write off” in your yearly taxes. Keep careful records of all those expenses you make during the year so that you can utilize every one for tax benefits.
Transition to Renewable Energy
Another easy way to get some great tax benefits is by switching to renewable energy sources! There are a number of tools and technologies you can implement in your business that will not only save the environment, but can also save you money in the long run. For example, solar panels provide tax credits from the federal government as well as local governments. Those tax credits add up quickly, and can then be subtracted from your overall tax due amount. Eco-friendly lighting, heating and air units, and water regulation will all decrease your carbon footprint, which the government is willing to reward!
You may also consider the potential benefits of registering your business as a limited liability company (LLC). LLC’s are not responsible for paying social security and Medicare taxes. Furthermore, you can choose your LLC’s tax rates by declaring the company as a corporation or “disregarded entity.” That disregarded entity separates the company from the owner, so any income from the LLC is considered “personal” income. This is also known as “pass-through” taxation and makes your tax returns much simpler to manage deductibles through, as well as preventing double taxation.
Reducing your small business’s tax expenses can save you a significant amount of money, yearly. And without the exposure or reach that larger businesses have, every amount of money that you save is money that you can put towards essential business development. Start with these tips for saving on your taxes!
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