Top 8 Business Tax Saving Tips For 2017
When we hear the word tax, what usually comes into mind is ‘Here I am overpaying again.’ A large sum of your hard earned profit goes to tax so you should put effort into finding ways to reduce it without breaking any laws (tax evasion is out of the question).
The reality is, whether you like it or not, as a business owner, you should know your taxes. You’re not the accountant but it’s important to at least have a general idea on how your tax payments are computed. Gaining knowledge about taxation will help any business and will give you better insights on where you need to adjust to save money.
We’ve made a list of 8 business tax saving tips that business owners and aspirants can practice to deduct tax spendings.
1. File your returns and pay your taxes before they’re due.
Just the mere idea that you don’t have to wait in the long queue is enough to motivate you to avoid filing or paying on due dates. Making early preparations gives your accountant or bookkeeper ample time to make computations which gives less room for mistakes.
2. Verify your records and declarations.
It’s a must to make sure that entries in your books are consistent with what’s at the tax bureau. Your sales declared in Percentage Tax Returns or gross revenues should be the same with what’s declared on your tax return. This goes for your wages and salaries declared too. Double-checking saves you from making additional payments.
3. Use tax-free means to get income from your business.
Discuss your options with your accountant. Look into medical coverage, retirement plans and other tax-free fringe benefits. Check other possibilities like no interest or low interest loans by the business to you.
4. Make accountable plans.
For companies who reimburse their personnel for travel and other costs, consider using an accountable plan. Through this, the business deducts expenses but does not report the reimbursements as income to save costs on employment taxes.
5. Study your carryovers.
Not everything can be carried over the following year so make sure to check causes for cap. Track carryovers to make sure you can use them to the full extent the next FY.
6. Abandon unused property instead of selling.
Consider getting rid of things that are of no use. Compared to selling which translates to capital loss, abandoning property can be considered ordinary loss which is fully deductible.
7. Do your payroll.
A lot of entrepreneurs wait ‘till the year is almost over to make their annual computations. Smart business owners have this done earlier so they can make necessary adjustments depending on their net income. Having a reliable payroll system like Payroll Pro or Payroll Enterprise will be of great help in automating your processes.
8. Add your child to your payroll.
This option works because you may be able to deduct their pay from your income if they pass the requirements. In some countries, you don’t pay Social Security tax when your child who is 17 or younger works for you.