When opening up a new business, there’s many startup fees that reoccur and can end up taking a bit more out of your wallet that you’d plan to. Oftentimes, because of all these fees, the business man never gets to truly open his doors.
But, owning your own business can be very rewarding and the costs wont completely use up all your resources and break your bank. In fact, there are a few strategies that can help you reduce your IRS business tax bill and hold on to more of your hard-earned income. Let’s take a look at how these 4 simple tips can improve tax reduction.
Adopt a Formal Business Entity Structure
If you are the sole owner or work in a business partnership, there’s a pretty good chance that the IRS is taxing you at one of the highest rates on the book. In which case, you must remember this can be a good thing since there are some options to help reduce what you owe them…
You could avoid this by going the formal route, formal business entity structure. This can immediately offer increased flexibility for your business, highly-desired limited liability protection and a reduction in taxes. You may choose to register an S corporation, C corporation or a limited liability company (LLC). With an LLC, you can choose to be taxed as either an S corp or C corp via the entity classification election.
Explore All IRS Business Tax Deductions
The IRS allows some “wiggle room” allowing businesses to write off a good number of expenses that are directly tied into their operations. Because of this, it is always critical to explore all possible business deductions that you could claim to reduce you income tax bill.
Start by considering claiming your home office, vehicle, meals and any type of “start-up” costs. Many new business owners are surprised by what they can get away with and write off on their taxes. They also save a lot of money through these valuable items if they’ve never claimed before.
Explore All IRS Business Tax Credits
Tax credits won’t give you as big as a break as tax deductions, but it’s still worth looking into to. Business owners who hire military personnel, veterans, or disabled individuals, utilize energy-efficient equipment for production purposes or are involved in certain industries are typically eligible to claim tax credits that can substantially reduce their IRS business taxes. Some credits can be collected annually, or multiple times, while others can only be collected once.
As a business owner, you have many jobs. You’re not just the foremen, you’re the supervisor, the manager, the worker, and everything in-between. One job that seems to be more of a pain involves handling the tax and accounting requirements of managing a formal, profit-generating business. Outsourcing your business tax filings, bookkeeping duties and payroll responsibilities can save you significant time, money, and headaches!
Corporate accountants know the secrets to reducing what their clients owe back. These tax-reducing strategies are 100% legitimate, it only makes sense to have a knowledgeable person in charge of your accounting. An accountant’s services are well worth the peace of mind and extra time you’ll get to focus on your top priority – making money.
In Conclusion, tax season doesn’t have to be a headache. Just follow these tips, leave a comment or question below, and you can get the most out of your taxes this year and keep your hard earned income!