In the past 13 years or so, it has been estimated that 93 percent of all small businesses in the US have paid more taxes than they strictly needed to. This is a shocking figure, but it is not particularly surprising as many small business owners do not fully understand the tax regulations, nor are they up on all of the latest ways to minimize their tax burden.
If you don’t want to be one of those people endlessly paying more than you have to and then struggling to boost your bottom line in myriad ways, you need to get serious about your accounts. To get you started, here are some of the most common ways of saving tax that small businesses often miss:
Make Use of Software
There is lots of excellent tax filing software out there that any business can use to make their accounting easier. The great thing about using these apps and programs is that you need very little knowledge of the system, nor do you need a great deal of input – the software does the bulk of the work for you, more accurately than you may be able to. It knows all of the loopholes so that you don’t have to.
Save Receipts Meticulously
One very simple thing that many small businesses neglect to do is saving receipts meticulously. When they throw away or misplace receipts, they are often throwing away money that they will have to pay in tax because they cannot prove it should be a deduction. A simple fix for this is to use a receipt scanning app, but a good filing system can be just as good. The key is to keep everything and keep it organized.
Use Mileage Tracking Apps
If your business requires you and your employees to travel in company vehicles, it is smart to use mileage tracking apps like Triplogmileage, to track fuel usage to a greater degree of accuracy. You can claim deductions for the fuel your and your employees use and mileage you do, so knowing exactly what your figures are could potentially save you a lot of money.
Pay More Towards Your Retirement
This may not so much benefit your business as it does your personal finances, but it is worth noting that, if you are self-employed, paying more towards your IRA or Roth will reduce your taxable income because they will not be taxed until you withdraw them when you retire.
Your Home office is Deductible
If you run your small business from your home address, it is worth noting that you can actually deduct any expenses relating to your home office when you file your taxes. You can charge for things like heating and lighting costs insurance, internet connection, and even mortgage payments. You will only be able to deduct a percentage, but everything helps to boost your company’s bottom line.
Cutting the cost of your tax bill as a small business is actually much easier than you might think and the above will certainly help to get you started.