3 Simple Ways To Lower Your Small Business Tax Burdens
Maintaining accurate records is vital to the success of any small business, and most business owners recognize that contracting with qualified accountants can be the best way to maintain accurate financial records.
It's important to recognize that your accountant can do more than just balance the books- he or she can actually help make you and your small business more profitable by identifying some tax advantages. Here are three things an accountant can do to help you lower your tax burden in the future.
1. Identify Carryovers
The full value of many of the items that you are allowed to deduct when filing your small business taxes may not be able to be used in your current tax year. Any value that wasn't claimed in prior years is considered a carryover, and can be applied to your taxes the next time you file.
Working with your accountant to identify and track carryovers will help you significantly reduce your tax burden in the future.
2. Tax-Free Income Extraction
Paying yourself a wage from your small business means that you must pay both business and income taxes on the money that you generate. If you are looking for some simple ways to reduce your tax burden, your accountant might be able to help you set up some tax-free income extraction outlets to let you access the money you need without additional taxation.
Options like medical coverage and no-interest loans issued from your business to your personal account which are exempt from being included as taxable income can be great ways to reduce your tax burden.
3. Business Restructuring
Ensuring that your business is structured correctly is essential when it comes to lowering your yearly tax burdens. There are several different types of business structures to select from, and an accountant will be able to help you determine which is uniquely suited to meet your small company's needs.
Simply by switching your business to an LLC and opting to pay taxes as an S corporation can help ensure that you only pay the employee's FICA taxes on the salary paid to you as the owner rather than paying both the employer's and employee's share of FICA taxes.
Finding simple ways to give yourself and your small company some tax breaks can free up income that you can reinvest into your company to help promote growth. Talk to an accounting services agency about possible tax benefits you should be taking advantage of to lower your tax burden in the future.