Business owners around the country are trying to save money wherever they can. Even though the economy has gotten much better in recent years, times are still hard for small business owners in many different industries. And one of the best and easiest ways to save money is on your taxes every year. Yes, we can hear you groaning already. No one likes doing their taxes, especially when they’re as complex as those for small businesses.
Well, we’re going to make your taxes a bit more bearable next year when you have to file. Just follow these tips and you’re going to find yourself with much lower taxes than you would be paying otherwise. Keep reading to learn some more!
- Watch Out for the AGI
First off, you’ve got to watch out for your Adjusted Gross Income (AGI) or your Modified Adjusted Gross Income, which is the same thing in the eyes of most filers. That’s because this number is directly tied to tax breaks, limitations, and additional taxes. You’ll be able to avoid certain taxes if you have an AGI that’s below a certain amount. Be sure to check with your tax professional to determine whether or not your small business meets the standards to avoid these taxes.
- Use Accountable Plans
Many businesses choose to reimburse their employees for various expenses. No matter if that’s for travel or for entertainment, you should be processing these expenses according to IRS regulations. This is known as using accountable plans. When you use this plan, you are able to deduct the expenses, but not count the reimbursements as extra income for your employees. This can potentially save your small business a ton in taxes, so be sure to see if you can do this when you process reimbursements.
- Abandon Property, Rather Than Selling It
Next up, we’re going to talk a bit about property. If you have a property on hand that has zero value for your business, you can see about the benefits of abandoning it, rather than selling it off for some amount. This would allow your business to take an ordinary loss on the property. As opposed to a capital loss, this is completely deductible from your taxes. Make sure to speak with an accountant or tax law attorney before you make this decision, as there are plenty of details to work out in the case of property taxes.
- Don’t Overlook the Carryovers
Depending on the deduction or credit you are looking at, these can have certain time limitations. However, they could also be carried over into the next year, depending on the fine print of the deduction. Make sure to keep a running tally of how many carryovers you’re going to have for future years. If you end up forgetting about these carryovers, you won’t be able to deduct them from your taxes and save tons of money to spend on expanding your business.
- Use Tax-Free Ways to Extract Income from Your Businesses
There are plenty of ways that you can benefit from your business’s success when it comes to taxes. For example, you can check with an accountant to see if you can deduct tax-free fringe benefits like medical coverage plans and medical plans. You can also see if certain loans would qualify for this deduction process. This is something that you should definitely speak with a qualified tax professional about because the details can vary greatly from business to business.
Each of these tips are going to help you save tons of money every year on those dreaded taxes. Like we said, no one wants to pay taxes, but it’s something that every small business has got to do to stay on the good side of the IRS. Keep these points in mind and you’ll be good to go for next tax season!