As the owner of a small business, tax season is not likely to be your favorite time of year. Not only is it a complicated process to file your individual taxes, but now you must ensure that your business taxes meet federal guidelines and that you avoid an audit whenever possible. Fortunately, there are some tax breaks available to those who own businesses. Throughout the year and when you are filing during tax season, keep these in mind.
1. Make sure your business is structured properly
You may have started out with an idea and a dream, but you never thought it would be the thriving business it is today. As you have grown and developed your brand, you should have also re-structured how your business is set up to save on taxes. If you are the owner of the company, the type of corporation you run your business income through may save you money in the long run.
2. Track travel expenses
If you travel for both business and pleasure and you can combine the two, you may be able to write off traveling expenses on your taxes. Business costs to travel are deductible while personal traveling costs are not, but if you can find a justifiable business purpose that combines the two types of travel, you may be able to write those costs off on your taxes.
3. Be prepared for health care needs
As health care costs rise and the market appears to be unstable, it is important for business owners to set aside money to pay for health care. This is also one of the most important ways you can reduce your taxes. Choose a high-deductible health plan or a health savings account to maximize your tax deductions.
4. Hire family members
The IRS allows for business owners to hire several members of the family, including children and spouses, providing this option as a way to protect income from taxes. If you can justify the hiring with a business purpose, you may be able to put a child’s salary away for future use in a Roth IRA, which provides your business with the tax benefit. This also allows you to prepare for your child’s future needs without deducting money from your paycheck.
5. Hire an attorney
Whether you are concerned about your tax liability or want to know more ways you can save on taxes, you may benefit from speaking to a tax attorney. Tax attorneys understand the complicated tax laws for businesses of both the state and the federal system.