When it comes to small enterprises, every penny counts, which is why small business owners try to find as many ways to reduce their tax burden and keep their business profitable and sustainable. The most common of which is to try and find and declare as many tax deductions as possible. But today, we’ll be taking a look at less common and multi-purpose ways for you to reduce your small business’ tax burden:
Using A Tax Software
Many small business owners prefer doing their own taxes as hiring an accountant may not be a viable option, considering the financial limitations. While it’s true that filing your own taxes can save you a lot of money, the IRS has reported that paper filing increases the rate of error by 21%, which means you might end up paying for more than you should. That said, invest in tax planning and filing software to help you reduce error in tax returns while making the entire process a lot faster and easier.
Work and Manage Your Business At Home
Give yourself a break once in a while and try managing your small business from home. Not only would this allow you a much-needed break and more time with your family, but it can actually help you reduce your small business’ tax burden by deducting your home office. The trick here is to allot a portion of your home (may it be an entire room, or part of your living room with an office table and computer) that is dedicated to running your business. A home office tax deduction can include expenses such as insurance, mortgage, repairs, and even your internet service.
Hire Family Members
Hiring family members allows you to help them by providing them a job while also allowing your small business a tax deduction. If you employ your child (under 18 years of age) to help you out with the business (as long as it complies with child labor laws), the child isn’t subject to FICA taxes, and nor would the business. Hiring your spouse or parent allows for the compensation pay to stay within the business, thus saving you on taxes.
Donate To Charity
The IRS supports businesses who give back to their community through tax incentives for donations. Just make sure that the charity you’re giving to is qualified, and secure acknowledgment from the organization you’re donating to (which is mandatory for any contributions worth $250 and more). Donating to your local charity organizations is a great way to support your community, improve your small business’ public perception and reputation, and cut back on taxes.
Investing in green, renewable sources of energy can save you a lot of money, not just in utilities but also in taxes. If your small shop in Boise uses a solar energy system, it can be eligible for Federal and State tax credits and deductions on renewable energy such as Solar Tax credit and Business Energy Tax Investment Credit. Additionally, going green can also help improve public perception and attract more environmentally-conscious consumers.
Lastly, if you’re able to make some adjustments to your business location (such as ramps) in order to accommodate customers with disabilities, you can take advantage of disabled access tax credits while allowing disabled customers access to your establishment.
While there are indeed more methods in reducing the tax burden that is more focused on taxes themselves, these multi-purpose tax-saving methods can greatly aid your business by providing more than just tax burden reduction. So, if you’re looking to hit two birds with one stone, consider using the methods listed above.