Paying taxes may be inescapable, but that doesn’t mean a high price tag is unavoidable. All Americans have a chance to employ tax-reduction strategies, and small business owners are no different.*
“Numerous small business deductions have been added to the tax code.”
If anything, owners of small businesses have an even greater chance to save, as numerous deductions have been added to the tax code to provide small businesses with as many breaks as possible. The trick is knowing how to utilize them.
Top tips for lower taxes
Before you get into the nitty-gritty details, remember some basic guidelines that will help you reduce your tax burden.
It’s a great idea to get in the habit of keeping detailed business records. Not only will this help you stay organized, it will also make it easier to determine which special tax breaks you qualify for. As an example, you may be entitled to tax breaks for travel, meals, entertainment, office supplies and much more. Thorough records will make taking advantage of these deductions easier.
Think beyond tax deductions. You may be eligible for special tax credits as a small business owner. These can come in many forms ranging from credits for purchasing energy-efficient technologies to remodeling your business premises to allow access to people with disabilities. With guidance from a tax professional who’s experienced with small business tax codes, you can explore your options and reduce your taxable income.
Your best bet is to work with a professional who is experienced in small business tax preparation to explore all your options and reduce your taxable income as much as possible. Otherwise you run the risk of missing out on some major savings.
Don’t miss these 3 commonly overlooked tax breaks
To optimize your tax returns consider the following:
1. State sales tax – This tax break is often overlooked because business owners aren’t even aware of its existence. This tax break has expired and been reinstated by Congress multiple times. It allows you to choose between taking a deduction from state income taxes or state sales taxes. If you live in a state that doesn’t have an income tax, this will obviously be an easy choice.
2. Keep your business loans in mind – Many small businesses require extra working capital at one time or another. If you borrow money from LoanMe, you may be able to deduct financing fees and interest on your loan. This is not something you can enjoy with all other alternative lenders. For instance, fees on cash advances, such as selling assets, are not a financing transaction and are not considered a loan. By applying for a loan online from LoanMe, you can better keep track of your business financing and ensure records are accurate during tax season.
3. Equipment depreciation – Businesses need tools to run, and these pieces of equipment can provide extra advantage during tax season. According to the IRS, if you own the equipment and use it to generate income, you can deduct its depreciation on your tax returns. However, the equipment must have a useful life of more than one year in order to qualify.
These are only a handful of the many tax breaks you can capitalize on year in and year out. From creating retirement plans for your employees to utilizing your home for business purposes, it pays to have an experienced accountant on hand who can help you maximize your returns.
*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice. Credit approval is subject to LoanMe’s credit standards, and actual terms (including actual loan amount) may vary by applicant. LoanMe requires certain supporting documentation with each new application. If you have any questions regarding this, call us at 844-311–2274. California loans are made pursuant to LoanMe’s California Department of Business Oversight Finance Lenders Law License #603K061. LoanMe also offers loans in certain other states which may have higher minimum loan amounts. Copyright © 2015 LoanMe, Inc. All rights reserved.