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Taxes can put pressure on a small business owner. You probably wear a lot of hats; the last thing you want to do is give the government your hard-earned money. Fortunately, there are many tax-saving strategies to reduce your taxable debt as a business owner. If you need ways to reduce your taxable income this year, consider some of the following options.
Hire a Family Member
One of the best ways to reduce the impact on your small business is to hire a family member. The Internal Revenue Service (IRS) allows for a variety of options; all of which have the potential benefit of tax evasion. You can even hire your kids.
According to Scott Goble, an accredited auditor (CPA) and founder of Sound Accounting, by hiring family members; “small businesses can afford to pay less, or eliminate taxes on their children’s income.”
For example, sole ownership is not required to pay public safety and Medicare tax on a child’s income; or the Federal Unemployment Tax Act (FUTA). It is important to point out that revenue needs to come from the right business objectives. The IRS also allows small business owners to reduce their taxes by hiring a spouse; who will not be subject to FUTA tax. Depending on the material benefits they may provide, you may be able to set aside some retirement benefits. So, it is a great strategy among all Tax Saving Strategies.
Start a Retirement Plan
As a small business owner, he offers 401 (k) game-related games. However, there are a few retirement account options that increase retirement savings and reap significant tax benefits. For example, with a 401 (k) single participant plan, the IRS allows you to set up up to $ 57,000 in total retirement contributions. Some of those retirement planning vehicles include: 2
Simplified Employee Pension Scheme (SEP)
- IRA or Roth IRA
- 403 (b) plans
There are a variety of retirement plan options for business owners on the IRS website as a tax-saving strategy.
Save Money for Health Care Needs
One of the best ways to reduce the tax on small businesses is to set aside money for health care needs. The cost of treatment continues to grow, and although you may be healthy right now, saving money for unexpected or future health needs is important. You can do this with a Health Care Account (HSA) if you have a good and affordable health plan.
“I also encourage every entrepreneur to consider the use of the HSA. As medical costs go up, more and more businesses are looking to reduce the cost of health insurance, “said Sean Moore, CFP, ChFC’s Smart Wealth Advisory.
Moore explains that savings come in three important ways, also known as triple taxpayers: your contributions are tax-deductible, grow tax-free, and waiver of appropriate medical expenses are tax-free. So, it is a great strategy among all Tax Saving Strategies.
Change the structure of your business
As a small business owner, you have no benefit for the employer to pay part of your tax. You are in love with all the amount of Social Security and Medicare taxes. If your business is tax-deductible as a limited liability company (LLC), you still have to pay those taxes, although in some cases you may be able to terminate the employer’s part of those two tax obligations45
This could be a smart move for some small businesses. While there are many other factors to consider with regard to these changes, such as paying proper wages and related risks, it can be a good way to reduce your tax liability.
Remove Travel Expenses
If you travel a lot, you may be able to lower your corporate taxes. Business trips are fully pulled, although personal trips do not enjoy the same benefits. However, to enhance your business trip, small business owners can combine personal travel with a suitable business purpose. Any flight miles achieved on business trips can also be used for personal travel over time.6
Conclusion
For Tax Saving Strategies with smart planning, you can reduce your taxable income as a small business owner and keep most of your money working for you. Schemes’ link p969. You can read How to Get a Small Business Loan in the United States? for more help.
