January comes around, and all of sudden the air is filled with less cheerful “Dahoo Dores”s and more panicked “Beware of tax season!”s. But the idea of a tax season is outdated, and perhaps even harmful to your business. Anyone can benefit from year-round tax preparation, but especially small business owners.
Can’t tell a 1040 from a 5500-SF? Here are some essential tax tips to boost your small business this year.
#1 Look at the Advantages
Yes, the lengthy tax codes could use a bit of editing. But the benefit of complex rules is how you can take advantage of loopholes. For small businesses, most tax savings come from either reclassification or specific incentives.
Research one of these nifty code strategies to save on this year’s filings:
- Go annual – Most businesses file all salary withholdings on a quarterly basis. But with IRS form 944, you can save both time and manpower by filing annually. Just make sure you request the form early (reason #1 of 12,679 to plan ahead).
- IRS business tax credits – During tax season, it can seem like the government is not your best friend. But the IRS has countless tax credits for small business owners to take advantage of, such as hiring veterans or providing childcare services.
- Medical reimbursement plans – IRS-approved and a big saver, a medical reimbursement plan can cover all health expenses for your entire team. Replace your standard group healthcare plan, and you can save up to 50% on medical care taxes.
#2 Start Retiring Now
Pensions, bonds, 401(k)’s,—oh my! Like a super-store, the more retirement options there are, the harder it is to pick. But unless you want a full-time job at eighty-three, early retirement planning is a must.
Lucky for your small business, there are ways to invest yours and your employees’ savings for maximum retirement time. A federal MyRA plan allows employees to contribute small payments to a ROTH IRA bond investment account. No extra fees and no withdrawal penalties, this is an excellent low-maintenance option.
And don’t sneeze at the Simple 401(k). With a tad more paperwork and a straightforward formula, employees can invest up to $13,500 per year of pre-tax salary towards their retirement.
#3 Take Advantage of Deductions
Here’s where your Dad was right about saving receipts. Keeping track of all business expenses not only keeps the books clean, but also can return you some cash through tax deductions.
- Car & Travel – If you only drive your Camaro to and from work, then you might qualify for business travel deductions. Want to get extra nifty? Plan vacations in tandem with work trips, and you can be compensated for a weekend city adventure.
- Home Office & Property – May we introduce you to our friend, Section 179? This neat clause allows you to deduct up to $1 million in property & office expenses for the year, including certain software.
- Education – That HTML coding class wasn’t beneficial for just your website. You can also deduct all education expenses from taxes, so long as they relate to your business (sadly, private tennis lessons don’t count.)
#4 Quality Accounting
For a small business, we know every single penny counts. And that’s why having a quality accountant is not only a smart investment, but a crucial one.
Accountants are for more than crunching bills. They can keep your payroll accurate and timely, maintain or trim your budget, and avoid any tax deadlines or penalties. They are the expense that always gives back.
Can’t afford personal accounting at the moment? Many accounting software programs can still provide the essentials. QuickBooks is the business world’s standard and learning its layout will be useful for years to come (add those classes to your education tax deduction!).
Jump Before the Gun
Nothing in life is certain except for death and taxes…and the benefits of early tax planning. We hope you can use these tips to help your small business keep the most of its well-earned income this year.