Paying taxes is one of the top duties of every responsible business owner. However, the laws governing taxes are so complicated that they can be hard to understand without assistance. In the absence of the right knowledge, you can end up paying more than you have to. This is why you should turn to one of the best tax filing services in Brampton for professional help with your accounting and taxes.
There are so many strategies that can prove to be useful when you are paying your yearly taxes. Let us talk about some of the most effective tax saving tips to save on tax payments.
Pro Finance E&E is your local & reliable accounting service, offering the best tax filing services in Brampton. Contact us to streamline the process of tax filing season in 2023.
7 Important Tax Saving Tips for Small Businesses
Let us talk about some of the best ways to improve the tax situation for small business owners.
1. Record your expenses well
Many expenses can go unrecorded when you are running a business. For example, charges paid for loading/unloading materials that you pay in cash are easily missed. If you don’t maintain proper records for such small expenses, your income on books can increase and you will end up paying a higher tax. It is therefore important to record every expense related to your business properly. A professional service such as Pro Finance E&E can take care of your bookkeeping tasks to avoid any mistake that could increase your liabilities.
2. Separate personal finances from your business
This is one of the most useful tax saving tips for small businesses. If you have started a new business or work from a home office, it is common to handle your daily expenses using a personal credit card. However, this can give rise to unnecessary complications in terms of tax deductions. Try to separate the personal and business finances from early on. The best way to do this is to have a dedicated bank account and card for your business.
3. Pay salary to your family members
Hiring your family members and paying them a salary benefits both the family member and your business. The salary you pay out to them is counted as a business deduction and is tax-free. Paying a salary to your family is a great way to save on your tax obligations in the next tax filing season. However, it is important to be reasonable when doing so. You must ensure that you pay a fair amount for the services they provide to the business. You can’t pay $400,000 as a salary to your family member for a simple administrative task.
4. Write off your losses
Writing off losses at the year’s end is a great way to lower your income on books and save on taxes. If you have customers that may fail to pay you or you had a capital loss during the year, you can write this amount off as a deduction for tax payment. This will ensure that you don’t have to pay tax on an income that you haven’t received. Contact us at Pro Finance E&E to learn how we can help you understand the deductibles applicable to your business.
5. Invest in retirement plans
Experts suggest investing in an IRS-approved retirement plan to save on tax payments in the next tax filing season. You can invest in plans for yourself and your employees to defer earnings because the IRS cannot levy tax on earnings that are to be earned in the future. A professional service can assist you in selecting the right retirement plan.
6. Consider an HSA
Traditional health insurance only covers bigger events and is not effective for everyday health spending. A Health Spending Account is a great option for small business owners as it covers almost every health-related expense and does not involve premiums. It can be considered a tax plan that converts personal medical expenses into tax deductibles for your business. Contact us to learn more about effective tax-saving plans for your business.
7. Hire a professional
Though most startups and small businesses prefer to handle everything on their own, tax filing is better left to professionals looking at its complex nature. An expert in the field like Pro Finance E&E can make your tax matters simple and help you save money by identifying the areas where you can save taxes and the techniques to ensure that you don’t pay more than what you should.
We hope these tips help you increase the amount you take home after tax payments. There are so many ways businesses can save on taxes, so it is best to do your research or take professional help from one of the best tax filing services in Brampton to get the maximum benefits.