When it comes to running a business, the tax man can make or break you. Small businesses may get a break in taxes, but it’s always necessary to work hard, put in the effort, and do your due diligence to save money on taxes. Whether you are trying to lower the amount of money you owe the IRS or increase the number that you are getting in your refund, there are many ways to prepare for tax season. Whatever the size of your business is, below are the best methods for businesses to get ahead of their taxes.
Use Payroll Software
One thing that you need to keep track of when you run a business is the payroll. The amount of money you are paying employees is not just taxed on their end, it can be a benefit on yours. Depending on how much you are paying employees, you can lower the overall business size and income for tax season. It doesn’t matter what you will do later, even if you plan on laying people off over the next year, it matters what the IRS sees now. Payroll software can help you keep better track of what you are paying employees and what would benefit the business when it comes to taxes.
Hire Professional Bookkeepers
If bookkeeping isn’t your strong suit and you don’t want to hire someone full-time to do it, you can work with a professional bookkeeping company. Online business bookkeeping can provide an easy and intuitive way to look at your numbers from wherever you are.
You will have a clear view of the money going in, the money going out, and how swaying the overall numbers in a specific direction will help you with taxes. Bookkeeping offers the clarity that businesses are looking for when it comes to taxes and the ability to use write-offs and deductibles.
Study Write-Offs & Deductibles
Perhaps the most important thing for taxes in small businesses is to study the write-offs. If you are in a specific tax bracket, it could benefit you to lower your company to the one below it by giving to charity. Charitable donations are tax write-offs that can help you accomplish this.
Are there write-offs for a certain number of employees? What about taxable income vs personal income? You can even get tax benefits from solar energy. There are plenty of ways to benefit from tax write-offs and deductibles, but you have to know what will benefit you. Therefore, you should do some research to get ahead of this by studying the various write-offs and deductibles that may come in handy for you and your business.
Leverage Property & Equity
Depending on the property the business owns and whether or not you have taken out a mortgage, there are a wide variety of ways to leverage real estate in tax season. Do you have equity on the property? You can refinance or a reverse mortgage to get some non-taxable funds. Property is one of the areas in taxes where you could lose or gain money based on your situation. When you are clear about your situation and know the best way to benefit from it, you will be able to lower the taxes you pay to the IRS or increase the refunds.
Work with Tax Professionals
Finally, when your taxes are complicated and you don’t know exactly what to do with them, you should take the time to work with tax professionals. Of course, consulting with tax experts will cost you some money, but in many cases the money they are able to save or increase in your refund will outweigh their fees. Owning a business isn’t easy, and the taxes get complicated fast. If you need help to find the write-offs and put yourself in a good tax position, it’s a good idea to consult the professionals.
Large businesses usually know how to evade taxes, but the small business owner might have trouble cultivating the most favorable position to be in. Whether you need to put in the research, use payroll software and online bookkeeping, leverage your write-offs and property, or work with the professionals, taking the time to get more money back from refunds or decrease the amount you owe to the IRS is worth it. It just might make your business.
