3 Tax Strategies Small Business Owners Should Know
Taxes can be stressful, especially for a small business owner. You don countless hats to keep your operations running smoothly, from the marketing manager, store clerk, and other more crucial roles. The last thing you want to do is give more money to the government than necessary.
Unfortunately, taxes are here to stay—the best thing you can do is to master their nature. Once you understand them like the back of your hand, you’re free to direct your focus to what matters most: business growth.
Business taxes are indeed challenging, but keeping accurate records and preparing for the year allows you to enjoy the year—even when the tax season comes around. How you may ask? Tax saving strategies!
From what the concept name suggests, tax savings strategies allow you to reduce your taxable liability as a small business owner. This means more income on your end, saving you more money for crucial operational expenses. Here’s what you can do:
Take Advantage of Depreciation Deductions
Your business likely makes use of various equipment, machinery, and even vehicles. These can be considered as tax write-off purchases, taken in the first year you own and use these items. What makes these equipment stand out, however?
They fall under accelerated depreciation, meaning they can be deducted from your taxes accordingly. The tax breaks vary depending on the asset you’ve purchased, so it’s best to speak to your tax accountant to find out if they qualify. Either way, you’ll be saving more in the long run!
Time Your Business Income
Your income and expenses come naturally to the nature of your business work, but timing is everything—even in such a fast-paced environment. You’ll want to time your income properly, which means moving it from one year to the next. However, you first need to determine which year you’re expected to pay most in taxes.
Doing so entails a thorough understanding and review of your current expenses. This should be done at the end of each fiscal year, which should enable you to prepare a certain amount to reduce your income for the next year. Keep in mind that you also have the capacity to increase your expenses and decrease your income during the year, which can be done by stocking up on supplies as a major expense.
Adjust Your Spending
Your cash flow is healthy and business is booming. If this is the case, make sure to pay for your expenses or make asset purchases in advance. It’s one of the best strategies a small business owner can make, as this allows you to bring any potential tax deductions forward.
Expenses should include items like office lease payments, equipment rentals, subscriptions, business insurance, travel expenses, communication bills, and even IT support services.
The Bottom Line
With wise planning and proper timing, you can reduce your taxable income significantly. This is particularly important as a small business owner, as you essentially allow yourself to keep more of your money. The extra cash enables you to save for more important things, such as business growth and expansion, product development, and even employee hiring. Tax deductions can still be tricky, but these strategies exist to help you gain more for less!
To avoid mistakes and other pitfalls, however, it’s best to work with a professional. New Wave Accounting offers the best tax accountant in Gold Coast, dedicated to helping you grow and scale your business. With our end-to-end solutions, we’ll make things happen for you. Reach out today!