Our Guide to Money-Saving Tax Deductions for Small Businesses in 2020
Small business owners often wear many hats to maximise their available resources and generate a higher ROI for their efforts, so it makes sense to ensure you can reap the rewards as much as possible. Unfortunately, it’s easy to lose a large portion of your hard-earned income once tax season knocks on your door.
Fortunately, there are money-saving strategies that can ease your tax burden and cut back as much as 20 percent off the business income. With the right preparation and accounting software, you can stay on top of your tax deductibles and pinch pennies to bolster your business growth.
The Basics of Qualified Business Income Deduction
Recent changes to the tax code in the Tax Cuts and Jobs Act of 2017 paved the way for more opportunities for eligible business owners, particularly for entities like sole proprietors, partnerships, S corporations, and limited liability corporations. Some of the deductions that can ease off your taxes include the following expenses, according to the Australian Taxation Office:
Business Transportation Vehicles;
Business Travel Expenses;
Uniforms and Protective Gears;
Home Office Expenses;
Interest for Employer Super Contributions, Income-Producing Assets, Income Tax Obligations, and Late Payments;
Travel Expenses for Relocating Businesses;
Digging Deeper into the 20 percent Business Income Deduction
As mentioned above, sole proprietors, partnerships, S corporations, and limited liability companies can leverage the new tax reform, wherein you can leverage $20,000 of a $100,000 income. It’s a significant amount that can help smooth the blow of high tax rates, allowing owners to see a whopping 29.6 percent reduction off your marginal tax rate.
Meanwhile, start-up businesses can write-off $5,000 for the fees involved in launching a new company, so long as the total costs exceed $50,000.
The Bottom Line: Reducing Taxable Income for Small Business Owners in 2020
Tracking the itemised deductions that can reduce the load off your taxes can do wonders for speeding up your business's scalability. Every penny counts when it comes to strengthening your foothold in the industry, so hiring the right accountant that can keep you in the loop of your tax-deductibles can make a huge difference in your bottom line.
Most know that vehicle costs, employee wages, and travel expenses are the standard deductions for SEM businesses, but having a professional accountant can help determine overlooked items that you can deduct, such as interest on bank loans and unusual deductibles like guard dogs, ping-pong tables, and other entertainment investments.
By keeping up with strategies that can minimise the dent in your taxable income, your business can ensure your profits work for you.
How Can We Manage Your Books?
If you’re looking for reliable accounting and bookkeeping services in Mermaid Beach to manage your tax returns, we’re the best accounting firm to call! Contact us at (07) 55041999 and see how our end-to-end accounting and bookkeeping services can help scale your business.