As ruthless as the IRS can be, they aren’t completely heartless and they themselves know that businesses can’t be expected to hand over unreasonable amounts of profit every time they file their tax returns.
As a result of this, for people looking to save on your business taxes, the IRS is set up in such a way that it provides a series of tax savings, breaks aka deductions for individuals and business owners alike.
No Whittier, Los Angeles, or any other business owner wants to spend more money than they have to, and if you’re looking to maximize your profits and cut back on unnecessary spending, this is the perfect planning article for you.
Below we’ll be listing 6 useful planning tips from tax experts that will help you to save on your business taxes. If you’re not using the strategies set out below, hopefully you will by the time you’ve finished reading.
Want to save on federal & state taxes? Get a free evaluation by calling us at 1-877-788-2937.
Check them out and let us know what you think.
Always deduct your home office expenses
In 2020, it became apparent that more of us than ever before would be working from home, and while normality is slowly creeping back, it’ll likely be a while before most of us are back in the office full time.
If you work from home, do not be afraid to deduct your expenses from your home office.
If you work from home, you’ll get heating allowances, phone expenses, internet expenses, equipment, and much more besides.
Always deduct travel expenses
Another expense which you are legally entitled to claim a portion of your tax return back from, is travel.
Business-related travel is completely deductible, so whether you’re simply driving around the block from your office, 100 or so miles each week, or jetting off to other States or countries, any business related travel expenses you incur can be claimed back as a deduction.
The thing to remember, plan for here is that personal travel expenses can NOT be claimed back, and please do not try to beat the system by claiming personal travel expenses as business expenses because the IRS will find you out.
You can legally juggle personal journeys with business journeys, so again, that is certainly worth considering.
Fund your own retirement plan
If you do want to save on your business taxes, another proven strategy that would allow you to do precisely that, is to fund your own retirement plan – pay yourself first.
If you set up and fund a retirement plan, either for yourself, or for people under your employment, this can help save you money on your federal IRS and state taxes – see or other tax planning articles.
You must ensure that it is actually a qualified plan in order to take advantage of any of these tax deductions or savings, and it must be one which is recognized via the IRS, in order to allow for deferment of taxes upon earnings, until said earnings are withdrawn.
Just so that you are aware, these include things such as 401(K), 403(b) plans, and IRAs.
Want to keep more of what you make? Get a free evaluation by calling us at 1-877-788-2937.
Deduct the cost of gifts
Another proven, yet less common strategy employed by anybody looking to save on your business taxes is to deduct the cost of gifts.
Did you know, for example, that legally you can deduct up to $25 per person, of the cost of gifts which are given to clients and/or customers and vendors.
There is, however, an exception which exists for individuals or entities which bear your company name, for gifts which cost less than $4 and those which are distributed as a matter of course.
We’re talking about thank you gifts such as hampers, bottles of wine, flowers, chocolate, promotional gifts, and those types of things. If you are thinking of saying thank you in the form of a party, or a day out, entertainment costs are much trickier to claim back.
The only way you could do this would be if the form of entertainment was directly related to your company, based in Whittier, Los Angeles, or any other city.
Write off bad debts to reduce your income
This may be a bitter pill to swallow, but sometimes it is worth taking a loss and wiping the slate clean, as it were, in order to make deduction savings on your taxes.
If you’ve a client with a reputation for not paying in full, for missing payments, for paying late, or simply not paying at all, sometimes it is best to simply write off these debts and cut ties with that client in order to reduce your taxable income.
If your business operates upon what is known as the accrual accounting method, you can find clients who are not likely to pay you, and you can write off the amount that they owe you as ‘bad debts’. The reason for this is that you can now deduct these amounts owed to you from your income to help you save on taxes.
Put very simply, the more you earn on paper, the more taxes you pay. On paper, you may have earned X amount of money, even though not all of it will have been paid in full yet. The IRS doesn’t know that, so as far as they’re concerned you owe what you owe.
Just to be aware, you can also include bad debts in the form of:
- Money owed from employees
- Business loans made to clients
- Business loans made to vendors
Let a professional handle your IRS & State tax return, planning and accounting
Finally, saving the best and the most obvious for last, if you want to save on your business taxes, you should hire an experienced accountant, tax attorney, or tax professional.
Rather than spending hour upon hour going through endless receipts, bank statements, accounts, bookkeeping, tax returns from previous years, and anything else relevant to your accounts, why not let a professional handle it instead?
If you hire an expert, in Whittier, Los Angeles, or other cities, they’ll help you claim back expenses and deductions which you are legally entitled to, with the added bonus of getting all of your books and accounts in order in the process.
There are many more very advanced tax savings, planning, strategies that can be implemented saving your tens, hundreds and millions of dollars. If you’re estimated net profit for the year will exceed 100,000 or much more, call us right away to see if you qualify for substantially slashing that taxable income.
Want to save on federal & state taxes? Get a free evaluation by calling us at 1-877-788-2937.