Being a small business owner is already costly on its own. With the costs of rental, supplies, and wages to pay, there’s hardly any left on your profit to take away from the cycle. However, owning and operating a small business is even more expensive when you pay more taxes than you should.
According to tax advisory service companies, almost every business overpay their taxes. While nobody expects you to be a tax professional, given that you have a business to run, it still is important to know that you pay exactly what you owe. This way, you get more money to cycle back into your business.
In this article, we share the ways you can save money on your taxes. But, first, we break down the three primary types of business taxes.
Income Taxes - These are state income taxes that you pay as a business, as in the case of a business organised as a C corporation or as an owner where you pay the taxes based on your share of business income and expenses. The latter is for businesses organised as a sole proprietorship, partnership, LLC, or S corporation.
Employment Taxes - If you have employees, you should withhold income taxes and your employees’ taxes. If your business is incorporated, you owe these taxes whether or not you are an employee. On the other hand, if you’re self-employed, you owe self-employed taxes on your net earnings from the business.
Sales Taxes - You are also required to collect sales taxes on your transactions. While the customers pay these taxes, you may be subjected to penalties for failing to collect these taxes or turning them over to the state.
Preparing for your taxes is the most practical way to manage your taxes. One step to do so is by partnering with a tax advisory service provider that can help you take advantage of tax policies that can help you save your hard-earned income.
The following are some of the things you should do next:
Know the Form of Your Business. Are you a corporation, LLC, partnership, or sole proprietor? As earlier said, each business type has specific tax forms. Therefore, knowing the form of your business can save you thousands in taxes and probably even more in headaches.
Gather Your Records. All your income and expense records will be essential in calculating your taxes. Here, you will be looking for expenses such as supplies and materials, travel expenses, insurance, ad costs, and legal and professional services.
Use the Correct Tax Forms. Each form of business has a corresponding tax form to fill. A tax advisory service company would usually do it for you, but should you do it, be sure to read every detail and instruction on the form. You’ll never know but these errors could lose you money just the same.
Practical Tips to Save Money on Taxes
Hire a Tax Advisor. Nexia TS is an assurance accounting and audit firm in Singapore that offers tax accounting services. It’s recommended even for the tax-savviest because it offers the protection you may not be able to afford otherwise. These service providers can help you prepare and file your tax return while backing up that filing with accuracy.
Keep All Your Receipts. Receipts are records of how you spend your money. Many of these receipts are for goods and services that can be deducted on your taxes. Therefore, while keeping receipts is a little bit time-consuming, it surely will be worth the while.
Deduct Your Home Office. If you operate from an office at home, you can actually determine what portion of your home and expenses is dedicated to running your business and deduct the expenses related to that home office.
Deduct Travel Expenses. If you travel for business, you can deduct it from your taxes. But, remember that personal travel does not let you enjoy the same benefits. Therefore, you might as well double your business travel as a personal trip.
Final Tips
- Write off bad debts
- Account for equipment depreciation (e.g. office equipment, vehicles, etc.)
- Pay taxes on time
- Schedule expenses or income into the appropriate year
- Deduct your charitable donations
While these tips can help, remember that these ideas have certain limitations associated with them. As a final reminder, consider consulting with a tax advisor. Not only will it help you follow the law properly, but it will also help maximise your benefit. They can help you reduce your taxable income and keep more of your money to keep your business going. Get solid tax advice and save money today. Visit Nexia TS for more information.
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