Entrepreneurs and business owners are responsible for paying income tax on the profits they make. This can be a significant sum, therefore they are constantly looking for deductions and exemptions to reduce their tax liability. One of the most difficult concepts to grasp is income tax but the income tax help desk makes all your GST and income tax-related services including income tax filing service and income tax consultation seem like a cakewalk.
Tips to do Small Businesses Avoid Paying Taxes
1. Employ a Family Member
Hiring a family member is one of the finest strategies to decrease taxes for your small business. The Internal Revenue Service (IRS) provides a number of options. Moreover, all of these have the ability to protect income from taxes. You can even hire your children to work for you.
2. Start a Retirement Plan
There are a number of retirement account options that can help you optimize your retirement savings while also providing substantial tax benefits.
3. Save Money for Healthcare Needs
One of the most effective ways to reduce small business taxes is to set aside money for medical expenditures. Medical prices are rising, and even if you are currently healthy, saving money for unexpected or future healthcare requirements is critical. If you have a high-deductible health plan that qualifies, you can do so with a Health Savings Account (HSA).
4. Change your Business Structure
You don’t have the benefit of an employer paying a percentage of your taxes as a small business owner. You’re responsible for paying all Social Security and Medicare taxes. You must still pay such taxes if your business is taxed as a limited liability corporation (LLC), however, in some cases you may be able to reduce the employer-half of those two tax liabilities. For some small firms, this could be a good decision. While there are several factors to consider before making this step, including paying oneself a decent income and other dangers, it can be an excellent strategy to lower your taxable liability.
5. Deduct Travel Expenses
You may be able to lower your business taxes if you travel frequently. While business travel is entirely deductible, personal travel is not. Small business owners, on the other hand, can combine personal travel with a justified business reason to maximize their business travel. Frequent flier miles earned for business travel can be utilized for personal travel at a later date.
To get the most out of this section, claim the expenses that are qualified for a deduction under Section 80C first. Then, by investing in suitable tax-saving investment options that match your long-term financial goals, you can exhaust the unutilized balance limit of Section 80C.
Tax preparation is rarely considered from an investing standpoint. They frequently seek out investments that will provide them with tax relief, allowing them to achieve their financial objectives. Avoid this blunder by aligning your investments with your financial objectives.
Final Thoughts
As a small business owner, you may lower your taxable income and keep more of your money working for you by planning ahead. Just make sure to check with a tax professional like the income tax help desk to see if you qualify for the savings mentioned here.
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