A competent business owner not only looks to maximize profits and minimize losses when reasonably possible, it also looks to legally minimize taxes where possible as well so the business can cut additional costs and save on precious money and resources. However, knowing what you can legally cut out of your taxes can be quite a challenge. Learn some tax saving strategies below that are legally compliant and can save your business money to be used in other areas or to increase your profitability.
Using the Qualified Business Income Tax Deduction
One of the tax saving strategies to utilize is this deduction created in 2018 from the Tax Cuts and Jobs Act (TCIA). Besides the usual ordinary business expense deductions you can claim, if your business is classified as a “pass-through entity,” which essentially means it is either a sole proprietorship (i.e. owned by one sole person), an S corporation, or a partnership. If your business is any of these classifications, you could potentially be able to take another 20% off of your taxes from your qualifying business income.
Funding Retirement Plans For Yourself and Your Employees
Another of the tax saving strategies to utilize is funding a retirement plan for yourself and your employees. The retirement account must be one that is recognized by the IRS, such as Individual Retirement Accounts (IRAs), 401(k)s, and 403(b)s. Doing this will allow you to defer taxes until the retirement accounts are accessed. Therefore, if you and your employees do not access the accounts until after you are retired as anticipated, you will not have to pay taxes on that money until years, even decades, into the future.
Sterling Tax and Accounting provides effective tax saving strategies and more for small businesses in Florida and beyond. Learn how our accounting services can help your business at https://www.sterling.cpa/.