Ever wonder why some small businesses pay far fewer taxes than others? It all comes down to expenses, deductions, credits, and documentation. Here are some important tips to help you maximize your small business deductions and only pay what you NEED to…
Tip #1 Keep detailed records all ALL expenses. This means always ask for a receipt and if you are not given one, create it! In the case of an IRS audit, even if you have cancelled checks and bank statements, the IRS can disallow any expense without a physical receipt as proof of purchase.
Tip#2 Contribute to a pre-tax retirement plan. This amount gets automatically deducted from your taxable income. Just think, you could put away up to $6,500 tax free! This equals a tax savings of $900 to $1700 annually!!
Tip #3 Pay your kids to help out at the office. While your tax rate may be somewhere between 15 to 28%, your kids can take advantage of a much lower tax rate. (contact your accounting professional for specific guidelines)
Tip #4 Make the right expenditures. Make every dollar spent, a calculated business deduction. Spend wisely. The more qualified business expenses you have, the lower your tax rate. You could even expense yourself down to a lower bracket!
Planning is always the best defense!
Contact us to find out more ways to save at tax time.