Taxes – there’s no avoiding them. But there are ways to reduce the amount you have to pay so that your business is more profitable. All it takes is some preparation, planning, and the advice of a good tax specialist.
So one of the first things you need to do is talk to your accountant about all the legal strategies available for minimizing your tax bill.
This is the best way to reduce the amount of tax you’ll have to pay. But it means being organized and efficient with all your records. You can’t claim something as an expense if you don’t have the necessary documentation. So it’s important that you keep detailed records of everything.
The first thing you’ll need to do is develop and maintain a meticulous filing system. This is where your accountant comes in – it’s a task you should do with them, or at least following their advice.
Some things to keep in mind are:
Even if your actual business is located somewhere else, it’s a good idea to set up a room in your house as an office and use it for business purposes when you can. As a small business owner, the chances are pretty high that you will end up doing some work from home, so you may as well take advantage of being able to claim a portion of your expenses related to business within your home.
Examples of potential partial deductions include:
Talk to your accountant about how to go about setting up a home office that meets all the conditions necessary to claim expenses.
An organized small business owner is one who files their taxes on time. Doing so means you’ll avoid paying penalties or interest, and this is a good saving.
Keeping good records is a lot easier these days, with many accounting software solutions available. It’s a good idea to talk to your accountant about which one will fit your business best, and which is compatible with their own systems.
And it’s not just to help you minimize your tax bill either. If you ever have to face an audit, poor record keeping will make this process more stressful than it has to be. And while keeping excellent records with a great software solution won’t help you avoid an audit, it could help avoid raising audit-triggering red flags as well as make the audit less painful.
So if your business is new, or you just haven’t got around to acquiring good accounting software, now’s the time to make an appointment with your accountant so you can discuss your options.
What you’re looking to do here is adjust parts of your business so that you can legitimately reduce your net profit, thus paying less tax. Some of the ways you can do this are:
Reducing the amount of tax you have to pay is down to good habits, good records and forward thinking. It literally pays to be as organized as possible, because it means you’re better placed to take advantage of all the legitimate ways you can minimize your tax bill.
All of this planning should be done in conjunction with your accountant. They’ll help you get organized and will assist in keeping your business on track so that you’re paying only what you absolutely have to and are getting the maximum benefits from what tax advantages are available.