Are you preparing for tax season and looking for ways to save your small business money? As a small business owner, you are likely trying to make this process as affordable as possible for the success of your business.
Keep reading this guide on tax planning for small businesses that can help you save money this tax season. These simple tips and tricks could save you tons of money in taxes.
- Save Money for Your Healthcare Needs
A great way to save money on your small business taxes is to put some money aside for your healthcare needs. Saving money for your future or unexpected healthcare needs can help you when you may need it most. As medical costs rise, it may be wise for you to explore HSAs, or a health savings account that can help if you have a highly deductible health plan.
If you’re looking to lower the taxes of you and your employees, as well as potentially associated medical costs, utilizing HSAs can help. This is due to the triple tax advantage it offers, meaning that the saving comes in three key ways. Your contributions are pre-tax and they grow tax-free so that your withdrawals for qualified medical expenses are then tax-free.
- Deduct Business Travel Expenses
You may be able to reduce your business taxes if you travel often for work. While personal travel expenses do not qualify, business travel is fully deductible.
Yet, to maximize this perk, many small business owners can combine justifiable business purpose with personal travel. Additionally, any frequent flyer points that you have earned from business travel can also be redeemed for personal travel later on.
- Employ a Family Member
One of the most effective ways to decrease your small business tax is to employ a family member. The International Revenue Service, or the IRS, has a variety of options with the potential of sheltering income from taxes. By hiring family members, small business owners can pay a lower marginal rate.
If you decide to hire one of your children, you can eliminate the tax on the income you paid to them. Additionally, sole proprietors do not have to pay Medicare, social security, and the Federal Unemployment Tax Act (FUTA) taxes on the wages of their children. Yet, it is important to note that these earnings need to come from a justifiable business purpose.
Small business owners may consider hiring a spouse to reduce their taxes. You may also be able to put aside retirement savings for them depending on the benefits they may have from another job. The spouse would also not be subject to the FUTA tax, as with hiring one’s child.
If you’re looking for professional help when it comes to your business’s tax planning and preparation this year, contact the Avitus Group today for quality assistance.
Tax Planning for Small Business
Use any of the tips from our tax planning for small business guide if applicable to save money this tax season.
For additional money-saving tips, head to the “Finance” section of our site.