Thu 12 Jun 2008
Important Tax Tips for Your Small Business
For your small business to prosper, it is important that you save the maximum amount on your taxes.
Here are some tips to help you do just that!
Distribute Your Income Within Your Family
You can legally distribute your income within your immediate family by paying wages to your children and spouse.
This way, you can pay lower taxes by diverting your income to another family member who might be in a lower tax bracket.
Claim All Available Deductions and Tax Credits
Your tax consultant can guide you on the maximum deductions that you can claim. They can also advise you of any tax credits that you are eligible for.
When you have a small business, it pays to have a tax consultant, even if it means paying a little bit extra.
Save and File All Receipts and Invoices
You should save and file all receipts and invoices related to your business.
This is very important; otherwise, the IRS will not allow any tax deductions or relief without any documentary proof if your business is audited.
Change Your Business Structure
You can explore changing your business structure from a sole proprietorship to an S Corporation or a Limited Liability Company (LLC), if it offers you tax relief.
Your tax consultant will be better equipped to guide you on the pros and cons of such a move, depending on your business and the state where you are located.
Invest Your Income in Tax-Free Instruments
You can invest your income in tax free instruments, such as government bonds or other tax-free funds.
Even though you will not be able to use the money immediately, this is better than frittering it away in taxes, and it will safely grow over the years.
Most Importantly, File Your Returns on Time, Every Time
By filing your returns and paying your taxes on time, every time, you will be indicating to the IRS that you are serious about paying your taxes. You will also avoid penalties and late fee charges.
By paying attention to the above tips, you will save on taxes and increase your savings and peace of mind.