Irrespective of any occupation that all of us are involved in, there is one common string or “headache” that we all are tied to.
And that is “tax”!
No matter how much you earn from your job or from your own business, paying taxes certainly doesn’t feel good!
Giving away a percentage of your hard-earned money is indeed like a burden irrespective of its size.
That being said, there are also certain ways in which this taxable income amount can be reduced. For instance, availing business accounting services work like a charm.
Following are the ways which you can adopt to reduce your taxable income if you happen to run a small business:
1. Structural change in business
Being the owner of a business, you automatically gain the position of an “employer.” Therefore, the entire responsibility of your employees’ medical expenditures and social security is upon your shoulders. Labelling your business to be a Limited Liability Company (LLC) enables you to skip the employer-half of these two tax responsibilities in certain situations. Therefore, this can be a good way to reduce taxable income.
2. Medical expenses
A smart yet practical way to save your hard-earned money is by saving it up for medical expenses. Obviously, healthcare expenditures tend to shoot up with each passing day. Therefore, if you are saving a fund under your Health Savings Account, or any such health plan with a considerable amount of premium, it accounts for a non-taxable expense! If it seems complex, choosing professional business accounting services can prove beneficial.
Not to mention at this point that, however tax-free it might be, medical expenses are necessary requirements for any person whatsoever. Therefore, not only are you reducing taxable income, but you are also contributing towards your own well-being! Quite a smart move!
3. Try to decrease travel expenses
Do you have to travel around a lot for business purposes? If yes, then we have good news! Travel expenses can be a way to reduce business taxes. Expenditures caused by business-related travels are totally tax-free. But this tax-free feature won’t be applied in case of your personal travels. Therefore, business-purpose traveling can indeed prove to be profitable for your small business!
4. Hire a family member
This is probably one of the most widely used and best ways to reduce payable tax amounts. And that is employing family members in small businesses. You can add your spouse or even your children to your small business. The IRS even has a list of options, all pointing towards safeguarding your income from taxes. As a matter of fact, small business owners enjoy the benefit of tax reductions if they employ their spouses. In such cases, the latter would not be subjected to the FUTA tax.
Conclusion
Those who seek business accounting services can have it easy. But if you haven’t done that yet, try these ways to reduce the taxable income of your small business.
You May Also Read: Reasons For Small Businesses Failing Miserably
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