If there’s one thing small business owners hate, it’s navigating taxes. Finding the right tax strategy can be pretty challenging, especially if you’re still in the early stages of running a business. As a result, you may miss out on tax-saving strategies and end up paying more than you need to.
Here are a few tax-saving strategies to consider for your small business.
Hiring a Family Member
Did you know you can reduce your taxes by hiring family members? The IRS offers certain relaxations to business taxes if family members are employed by the business owner, saving the latter hundreds of dollars.
For instance, you can hire your spouse for a relevant role at your company. This way, they wouldn’t be subjected to the FUTA tax. Similarly, hiring your children in a sole proprietorship can eliminate social security taxes on their salaries.
While hiring a family member is an effective tax-saving strategy, make sure you’re employing qualified and credible individuals who can add value to your business.
Modifying Your Business Structure
The downside of being a small business owner is that you don’t have an employer paying a certain section of your taxes. You’re responsible for all your expenses and taxable amounts, including Medicare and social security.
If you can, consider switching your business structure to a limited liability company (LLC). You’ll still be required to pay taxes, but it’ll give you leverage over certain tax responsibilities. Registering your business as an LLC is an effective tax-saving strategy and can help reduce the final payable amount. However, make sure you do your due diligence before taking any drastic measures.
Deducting Travel Expenses
Finally, make the most of your business travels by deducting the necessary expenses. Business travel is deductible, and this includes more than just the mileage or airline tickets. You can include a significant chunk of your travel costs in your deductable expenses, as long as they’re justifiable.
For instance, you can include accommodation and dining costs in your deductible travel expenses if you’re on a business trip. However, this doesn’t mean you add all your personal traveling expenses to your business expenses. The fare for the cab ride from your hotel to the meeting venue can be compensated, but the souvenirs you pick up along the way don’t count as business expenses. Make sure you keep all your receipts and records to back up claims in case the IRS requires further evidence.
Make sure you reach out to a professional small business tax planning service to execute the best tax-saving strategy for your firm. Remote Quality Bookkeeping Services provides tax preparation services to small and medium-sized businesses in the US. We also offer cost-effective bookkeeping solutions, inventory management, payroll outsourcing services, and accounting services. Contact us today to get started!