Taxes are stressful for both small and big business owners. The last thing you want is to give more of your business income to the government. You can use the best tax relief companies to save some money. There are several ways to reduce your taxable income. Here are some ways to save on tax for businesses:
Set a Retirement Plan
You should set up and fund a retirement plan for your employees and yourself to help save money on taxes. The retirement plan should be qualified to take advantage of the tax savings. The Internal Revenue Service (IRS) must recognize your plan to allow deferment of taxes on earnings until the earnings are withdrawn.
The contributions depend on the business, the goals, and your needs. A financial expert can help you figure out the best plan for you. Make sure you choose the retirement account option that will maximize retirement savings and give you valuable tax benefits.
Hire an Expert
Business owners may not have the knowledge to handle all matters concerning taxes. Furthermore, they end up paying a higher amount of taxes due to improper or no tax planning. If the right advice is available at the right time most business owners can save much tax. Accountants are considered the best tax planners in the field of taxation.
Their work is to ensure that maximum tax can be saved within the bounds of law and giving maximum benefits of tax saving schemes. Before making any decisions that are likely to affect your business tax return consult a tax professional. Get someone who can help you throughout the year not just during tax time. A certified agent is also the right person to deal with.
File Income Tax Return on Time
Filing income tax returns on time has many benefits one being carrying forward losses on business income. Business income losses can be carried forward consecutively for eight years and set off against income of the next years if the same is not set off against the incomes in the current year.
You will enjoy the benefit of carrying forward losses only when the income tax return is filed on or before the deadline. It is important to keep in mind the dates for the timely filing of the income tax returns and prevent any delays.
Employ Family Members
The best way to reduce taxes for small businesses is to hire family members. There are several options allowed by the Internal Revenue Service (IRS) which gives the benefit of sheltering income from taxes. Small businesses pay a lower marginal rate or eliminate the tax on the income paid to their children.
IRS also allows small business owners the benefit of reducing their taxes by hiring a spouse who would not be subject to the Federal Unemployment Tax Act Tax (FUTA). If your business structure is a sole proprietorship you do not need to pay social security and Medicare tax on the wages of a child or FUTA.