As a business owner, you want to do as much as you can to save on your taxes. Putting a heavy emphasis on your business taxes can potentially save you tens of thousands of dollars every year. There are many things you can do to ensure you pay less in small business taxes this year. Here are five examples of strategies you can use, brought to you by the insurance experts from Altra Insurance, a premier provider of business insurance San Diego business owners rely on.
1. Track Your Deductible Expenses
While most business owners are aware of deductions, there are still expenses they miss. To ensure all your expenses are tracked, use a designated credit card for all your business purchases. This credit card should be used only for your business and nothing else. If you’re paying by cash, use one of the many apps that take a picture of your receipt and store it for future reference.
2. Max Out Your Retirement Accounts
A great way to speed up your retirement and save on your taxes is to max out your retirement accounts. Retirement is just as important to you as a small business owner as it is for a salary-based employee. You can contribute to a small business owner 401(k) and an IRA. You don’t pay taxes on contributions to your retirement accounts, and they’ll grow every year if you invest the money properly.
3. Reinvest Profits Regularly Before the Year Is Over
As any small business owner knows, you need to reinvest profits back into your business (advertising, marketing, expansion, equipment, etc.) to scale it up. If you don’t reinvest properly during the year, you’ll find the money you could’ve spent to grow your business ends up getting taxed, which is why you need to be active about how you reinvest profits. Don’t wait until November or December to figure out how to make the most of your excess capital.
4. Look for the Latest Tax Credits
Federal, state, and municipal governments offer many tax credits that can help you save extra money on taxes. One example is the Business Energy Tax Investment Credit, which gives you tax credits for switching to green energy solutions. Another is the Work Opportunity Tax Credit, which gives you tax credits for hiring employees in specific categories. Research the programs available in your city and state as well as at the federal level to take advantage of the tax credits that apply to your business.
5. Change Your Business Structure
You can save a lot of money on taxes by choosing the right business structure. For example, you can choose an LLC to be taxed as an S corporation, which allows you pay yourself a salary as you see fit. The remaining income isn’t subject to FICA taxes like the income you pay yourself.
These are just a few ways your small business can save on taxes. There are many other solutions as well. Do your research and stay updated on the latest tax laws if you want to save as much money as possible.
Saving money on taxes is only one way to make sure your business stays strong and grows. Another crucial way to protect your business is to purchase commercial insurance from reliable, experienced professionals. Altra Insurance Services is a trusted provider of insurance for individuals and businesses. We offer coverage for almost all your insurance needs, including homeowners, renters, and auto insurance. San Diego business owners should give us a call today at (800) 719-9972.