Tax time is something everyone dreads, but business owners worry even more because of the complexity of filing taxes for their company. When tax time arrives, business owners may be worried about how much they’re going to end up paying for their taxes. However, with the following tips, it might be possible for them to lower the amount they pay so they can save as much money as possible.
Find Out How Tax Laws Have Changed
Tax laws change every year. Though many of the changes are relatively minor, they may make a difference for business owners. It’s important to talk to a tax expert about the changes for the coming tax season ahead of time to be prepared and to understand how this can impact what they’ll pay for taxes. For example, business owners in US can get information at BSWLLC.com about the latest changes to tax laws so they can figure out how these changes will impact them.
Stock Up on Things that Can Be Deducted
Lots of items that businesses use regularly can be deducted when doing taxes. Business owners can stock up on office supplies and other types of inventory, then deduct these expenses when they do their taxes. Other items that can be pre-paid for may also be able to be deducted from taxes, which can lead to significant savings for business owners. Talk to a tax expert to find out what can be purchased before the end of the year to use as a deduction when filing taxes.
Check Out Deductions for Large Assets
Inventory and small assets aren’t the only things that can lead to deductions. Vehicles, business equipment, and other large assets will depreciate over time. These items can be included in taxes, and a deduction can be taken for the depreciation. It may be possible to deduct the full amount of depreciation when equipment is purchased, so talk to a tax expert to find out if this is possible. If it is, now might be the time to invest in new equipment instead of waiting for the new year.
Start Deducting Travel Expenses
Business owners who travel a lot might be missing out on tons of savings if they don’t already deduct travel expenses. The travel does need to be business-related for it to count as a deduction for taxes, but it is usually okay to mix business and personal travel. Check with a tax expert to find out which travel expenses can be deducted, but business owners are frequently able to deduct travel arrangements like airfare, hotel rooms, and food.
Think About Changing the Business Structure
Changing the business structure is a huge decision that should not be taken lightly and may not be plausible to do more than once. However, having a different business structure could have an impact on the amount of taxes that need to be paid. Different business structures have different tax responsibilities, so talk to a tax expert or a business lawyer to determine if changing the business structure might be a good idea and a good way to save on taxes. Once the tax structure has been changed, the new tax responsibilities should stay consistent for future years, so even though this isn’t something to do every year, it can impact future taxes considerably and lead to large savings in the long run.
Look for Tax Credits to Use
Tax credits are a great way to save more on taxes, but it depends on which ones the business can use. Check out the different tax credits for businesses to learn more about all of the different credits and to find out which ones may be applicable for the coming tax season. Depending on the type of credits that can be used and how many the business can take advantage of, this could lead to large savings. A tax expert can help determine which ones are a good idea.
Write Off Old Equipment
Equipment can be used as a tax benefit when it’s new because of depreciation, but it can be used again when it’s too old to use anymore. Old inventory that needs to be thrown away and equipment that has become obsolete may be able to be used as a tax deduction to lower the amount of taxes that need to be paid. Go through all equipment and inventory before the end of the tax year and create a list of everything that needs to be disposed of to see how much of an impact this might have.
Write Off Bad Debts
It might be time to start thinking about writing off bad debts that aren’t likely to be paid. Depending on the type of accounting used for the business, these bad debts may be able to be written off and used as a way to lower taxes. Many companies are going to use this at the end of the year to reduce their tax responsibilities significantly. A tax expert can help explain how much money could be saved through this method and which bad debts should be written off before the tax year ends.
Look into Deductions for Bonuses
Bonuses for employees awards given to certain employees, and gifts given to vendors, employees, and customers may be able to be used as a tax deduction. Talk to a tax expert for this, but it may be possible to deduct expenses used towards marketing materials to give to customers or awards for employees who help the business perform better. Business owners who purchase promo items and give them away at a tradeshow, for instance, may be able to deduct these costs to save on their taxes.
Tax time may be stressful and complicated, but there are ways for business owners to save as much money as possible each year. Go through these ideas to determine which ones might be applicable for your business and talk to a tax expert today to learn more about the different credits, deductions, and other tax-saving measures you can take advantage of to minimize how much you’ll pay next year.
