Are you a business owner? Then stop for a second and think about how you’ve been paying your taxes. Doesn’t it feel like your taxes are just a bit more than they really should be? Well then, you’d be pleased to know that there are actually ways you can save on business taxes. And when you hire accounting services, you'll find that these tax saving methods are actually quite accessible, easy, and hassle-free.
You don’t have to be among the many small business owners out there who overpay their taxes. This happens because there are possible deductions on taxes that business owners tend to miss, simply because the US tax code is too long for most people to be able to scrutinize. With that said, it's an accountant's duty to help taxpayers keep watch for these saving opportunities aside from actually facilitating most finance-related matters. With this in mind, here are just some of the many general ways you can save on your business and personal taxes, with the guidance of accountants:
- Stay informed about tax law changes
Every now and then, there would be revisions to existing tax laws or additions of new ones that enable taxpayers to lower their taxes, but may also contain drawbacks. So to stay updated on the current laws and any changes on calculations, you should always stay tuned to such tax law changes. An example was the 2017 Tax Cuts and Jobs Act. Among the many changes made in this act, the few that’s worth pointing out are the lowered income tax rates, almost the doubling of the standard tax deduction, and increase in the child tax credits. All of these resulted in the fact that in 2018, FEWER families and households had to pay higher taxes than in the previous year. However, not all taxpayers enjoyed a reduction in taxes. Due to the limitation of 10,000.00 for state and local taxes and the elimination of the personal exemption, there were taxpayers who paid a higher tax.
- Take advantage of various tax credits
There are tax credits specifically designed for business. These tax credits are incentives given by the government in order to encourage businesses to do or not do certain activities. For example, your business may be eligible for a certain type of tax credit if you utilize “green” or environmentally friendly items and equipment, or if your business is conducting research. There are many other tax credits that you can be eligible for, but it’s up to you to discuss with your CPA what these could be.
- Set up retirement plans
This is for both you as the business owner and your employees if you have any. Contributing more for retirement and investment plans, as long as they’re IRS-qualified, can help reduce the total amount of taxes for your business by providing tax deductions and by deferring taxes for your contributions, plus you may also become qualified for a tax credit by doing this.
- Buy equipment, give bonuses
Businesses are given the opportunity to deduct the value of their purchases on equipment and vehicles through accelerated depreciation — so buying items for your business is an easy way to lower your taxes, while increasing productivity and efficiency and, this equipment does not have to be new. Used equipment qualifies for the same deduction.
Similarly, you may also deduct a portion of the cost of the gifts, awards, and bonuses you’ve given your employees and clients.
- Consult your tax advisor (CPA)
This is the most important consideration that you should always remember. Without the guidance of an expert in finance and taxes such as CPAs, who are constantly studying about the reformations in tax and other related laws, there’s a risk that you’ll have a hard time getting all of these right. Even if you are able to do this by yourself, chances are the level of accuracy of certain computations won’t be as high as when you consult with your tax advisor and let them handle the paperwork.
And that’s why we’re here. Nicholas J. Coco, CPA is a firm offering tax and accounting services in Kearny, NJ to everyone across the state looking for assistance with their finance and taxes. So give us a call, send us an email, or get in touch with us through our contact page. With us, saving on your taxes through these and many other methods will be a cinch! We’ll make sure that you can take as much advantage of our current tax laws as possible, so you can achieve success in your business and save through legal means.