Paying business taxes can be burdensome and difficult for startup owners. Especially when your business is just getting started, every penny is vital toward your success. To save money on your taxes, implement the following practices.
Keep Track of Expenses
Your business’ tax liability will be partly determined based on your business’ expenses throughout the year. If you keep track of every expense you deal with during the year, you can find many more tax deductibles than you would otherwise have. Many of your business expenses can be used as tax deductions, and keeping track of these expenses can help you know how much to save in the end. If you don’t stay organized and lose track of these expenses, you will end up paying much more in the end. Instead, invest in software that can help you keep track of what you’re spending.
Contribute to an Employee Retirement Plan
Another way to minimize your business’ tax liability is to contribute to employee retirement plans. These plans are tax-free and allow you to help your employees reach a more secure retirement. Many individuals’ top request from their employers is a retirement plan. Contributing to these accounts not only helps you save money on your taxes but also helps you maintain your employees and avoid employee turnover. Be sure to keep track of the amount you can contribute to each plan. Profit-sharing contributions are capped at an absolute maximum of $61,000. These types of plans give you more freedom as the employer and allow you to decide exactly how much to contribute each year. You can also choose to not contribute if you choose.
Hire a Great Accountant
Keeping track of your business’ taxes is difficult work. Without an in-depth background in finances, it can be difficult to determine just how much your business owes in taxes. If you miscalculate, you run the risk of overpaying or being fined for not paying enough. An accountant can keep a watchful eye on your business’ taxes, and ensure that you’re paying the proper amount. An accountant is a beneficial addition to your company, but it can be difficult to afford to hire one full-time. Luckily, there are many ways to outsource your business’ accounting needs to individual accountants on a need-based basis. Instead of keeping an accountant on your payroll full-time, you can hire one for your specific needs only.
Paying taxes is one of the most frustrating parts of running a business. However, it’s important that you save as much money as possible to help your startup continue to do well next year. Follow these steps to reduce your business's tax liability.
Check out this article on how to create tools that work for your business!