Top 7 Small Business Tax Tips
By J. Stephen Pope |
Here are seven ways for owners of small businesses to save money on their
taxes.
1. Incorporate Yourself: If you`re still a proprietor or partner
of a business, it`s time to incorporate yourself. Not only will you limit your
liability, but you may enjoy lower tax rates on small business income and other
tax advantages as well.
2. Be Home Based: If possible, continue (or
switch to)
being a home based business. Not only will you keep your overhead
down, but you will be able to write-off (or deduct) the business use of your
home.
3. Income Split: Pay reasonable wages to your spouse and children.
In this way, you can legally divert income taxed at your higher rate to your
family members that are in a lower tax bracket.
4. Rearrange Your Affairs
For Maximum Tax Savings: Can you make some changes to turn your hobby into a
moneymaking business? Can you use that extra room in your house as a home office
for your business? Can you arrange to use your car more for business purposes?
Can you arrange for more of your entertainment expenses to be business related?
5. Document Your Expenses Well: Do you document your expenses well so
that they would survive a tax audit? Have you kept a mileage log so that you can
prove the percentage business use you claim for your vehicle? Have you kept
receipts for all your entertainment expenses and listed the business purpose on
the back of each receipt?
6. Be Punctual: File all returns and pay all
taxes due(income, payroll, sales, et cetera) on time. This way, you avoid
expensive late filing (and payment) penalties and interest.
7. Develop a
Tax Planning Mindset: Some people only worry about their taxes during tax
season. However, you will save a fortune in taxes, legally, if you make tax
planning your year-round concern. Do you make business and personal purchases,
investments, and other expenditures with tax savings in mind?
About the Author
J. Stephen Pope,
President of Pope Consulting Inc.,
http://www.popeconsultinginc.com/ has been helping
clients to earn maximum business profits for over twenty-five years.
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