9 Ways to Minimise Small Business Taxes
There’s nothing like owning your own small business. But while having a business comes with a lot of perks (setting your own hours, working in your pajamas…), there are also a few drawbacks, and one of the largest is when it comes time to file your taxes. No one likes paying taxes, but most first-time small business owners quickly realise that the government seems to enjoy taxing small business owners as much as possible. Fortunately there are a few ways that you can lower your taxes – and yes, they’re legal!
Charity
Contributing to a charity is good for the soul…and the tax bill. By donating to non-profit groups you can reduce your tax liability, and you may even be able to find tax incentives for giving contributions as well!
Buy, Buy, Buy!
Quite often small business owners wait to purchase expensive items because they believe that they should wait until they have a larger revenue stream. In the world of taxes, however, purchasing new equipment when you need it can actually be a huge benefit!
The Accountable Plan
Do your employees use their vehicle for company business? Save money by setting up an accountable plan. This way you can reimburse your employee without having to treat that money as income! The employee’s happy and your taxes are lower – it’s a win-win situation for everyone.
Benefits, Not Raises
Employees looking to get more money? Try increasing their benefits instead. Increasing your contribution to their benefits, such as their health insurance, helps both the employee and the employer.
Defer Your Income
When December comes around try waiting a few extra days to bill so that you won’t receive payments until January – this can save quite a bit of money.
Paying Bills
Similarly you can save money by paying your bills early. Pay those January bills in December and you can take that as a deduction.
Maximise Deductions
Deductions are great and there are a lot of write-offs you can take, such as office expenses, education, memberships, and much more. Just make sure you keep very accurate records of all of your deductions.
Independent Contractors
Independent contractors have to take care of their own taxes, which is why many small business owners prefer to hire independent contractors, especially if the bulk of their work is online.
Structure
Structuring your business correctly can save you money. For instance you may be able to become a corporation, which means you’ll be taxed at a much lower rate for a bulk of your income.
This is general advice and an accountant should be consulted before implementing any changes to your tax structures.
