Especially when your business is still growing, the cost of taxes can be daunting for a small business. There are a few steps that you can take to reduce your taxes considerably.
Hire a Tax Specialist
The first thing to do is hire a consultant who will be able to offer you sound advice on your tax planning. A small business accounting specialist from a company like Bliss & Skeen CPAs with experience doing tax planning is one good option. The added benefit is that you can have them handle other financial tasks throughout the year so that they will be well acquainted with your finances and can provide great service. Another is to hire a tax reduction consultant or tax services professional; these specialists focus on only the tax aspect of your finances. Either way, hiring someone on to do regular maintenance to your taxes can help you make sure that you're still going in the right direction.
Consider Your Business Status
One initial thing that your financial consultant may look at is how your business structure is affecting your taxes. They may consider moves like incorporating and choosing a sole proprietorship vs. a corporation as means to change your tax liability.
Take All Deductions
Your accountant will also help you to create a list of deductions that you may be eligible for in the upcoming tax season. Knowing what you'll qualify for ahead of time may affect your business strategy; you might funnel more dollars into programs that would give you a tax write off, for example.
Consider Ways to Reduce Payroll Tax
Payroll tax can be a major portion of your business taxes. If there are ways that you can reduce your payroll taxes, your consultant will advise you to take advantage of them. This could include giving employees more fringe benefits rather than increased salaries, or setting up accountable plans to reimburse employees for non-income expenses.
Do Some Financial Planning and Accounting
Finally, you can reduce your taxes by doing some good financial planning and small business accounting throughout the year. Have your accountant help you set up good systems to make sure that you don't overpay for your taxes. For instance, set aside deductible business expenses in one account so that you don't miss any at the end of the year. Another helpful strategy is to plan out your expenses and sales so that they fall within a specific tax year to change the amounts owed that year. In the end, the time you invest in reducing taxes will often benefit you in the long-term through better accounting practices.