If you can find legal methods of reducing tax expenses, your small business will retain more income and grow faster. Here are three ways to lower your taxes.
Becoming an entrepreneur is one of the most terrifying and exhilarating experiences. Owning a business comes with many unpleasant nuances. Complicated taxes, in particular, are one of them.
Fortunately, though, there are plenty of methods that business owners can use when it comes to reducing tax.
Not sure where to start? Don’t worry, we’ve got you covered.
Let’s take a look at common hacks for reducing small business taxes.
1. Deduct Your Travel Expenses
If you frequently travel to meet clients, you’ll find that the associated expenses quickly add up. Even when using rewards points and other discounts on flights, hotels, etc., these costs can still put a dent in your budget.
It’s important to note that while personal travel isn’t able to be deducted on your taxes, you can take advantage of your necessary business travel obligations to fulfill personal desires.
For example, if you happen to be visiting a client in a city you’d like to explore, you can book an extra day or two to see what the area has to offer.
Additionally, you can also deduct travel expenses if you frequently drive to meet with clients or deliver products/services. Gas, insurance, and vehicle depreciation are all fair game when it comes to tax deductions.
2. Contribute to Your Retirement
There are many different retirement plans that you can take advantage of to help save yourself a bit of extra cash on taxes. In some cases, you can deduct the amount that you contribute from your gross income for the year.
Then, you’ll only have to pay taxes on your adjusted gross income, which can be significantly less depending on how much you choose to invest in this type of account.
To see what options are best for your situation, it’s recommended to meet with a certified personal accountant. The more financial information you have on-hand, the better they can help you.
If you need to print last year’s financial info, you can find a printable W2 form 2019 here.
3. Deduct Space You Use For Your Home Office
Not every small business is run out of a multi-floored building with teams of employees. In fact, it’s fairly common for companies to be operated from a desk in a spare bedroom.
If you have a dedicated space in your home that you use to run your company, you’re able to deduct part of what you pay in rent from your gross income. The total will depend on the total amount of square footage your office takes up.
You’ll also be able to deduct a portion of your utility bills depending on how much space you use for your office, as well.
Reducing Tax Obligations for Your Business Can Seem Difficult
But it doesn’t have to be. With the above information about reducing tax in mind, you’ll be well on your way toward getting the most out of the process.
Want to learn more business tips that can help you out in the future? Be sure to check out the rest of our blog.