Growing a small business is exciting. You get to serve customers, set ambitious goals, and challenge yourself. However, you also have to pay small business taxes.
Every business needs to pay its fair share. Some small companies overpay and end up getting a tax refund.
A tax refund is a bad thing. The IRS does not give you that money right away. They may give you less than you deserve.
This money also stays on the sidelines for over a year. You can lower your tax bill in 2021. These small business tax tips will help you get started.
Consider Your Unearned Income
Most people quickly think about earned income. They think about wages and revenue. However, you must also report unearned income.
Unearned income ranges from alimony payments to capital gains. Your unearned income will increase your annual taxes.
Considering your unearned income leads to fewer surprises on tax day. You can also lower your unearned income by selling unprofitable investments.
You can sell a stock position at a loss. This transaction will count as a tax deduction.
You can buy back into the position more than 30 days later. This timeframe lets you avoid the wash sale rule.
Stay on Top of Tax Deductions
Tax deductions are your best friend. Deductions reduce your tax bill.
Some expenses continue coming up for your business. You can use these expenses to reduce your tax bill each year. Popular tax deductions include the following:
- Social media advertising
- Business travel
- Home office
- Telephone and internet
You don’t want to miss out on these popular tax deductions. Assemble documentation of these expenses in advance. Addressing these deductibles each month lowers the stress of tax season.
You can organize your documents in a binder for easy reference. Do a little bit each month instead of stressing a week before filing taxes.
Accountants Know the Best Small Business Tax Tips
You can file taxes on your own. You can select from various online software solutions.
While these resources will guide you to filing taxes, you can make mistakes. Mistakes on your tax returns can cost considerable money.
You may forget to file unearned income or another essential detail. DIY tax filers are more likely to miss out on tax deductibles.
Instead of doing your taxes on your own, reach out to an accountant. An accountant can view your small business taxes with a fresh set of eyes. They can advise on new deductibles and ways to save money.
Accountants can provide an immediate return on investment based on your tax savings.
Go Into 2022 Feeling Confident About Your Small Business Taxes
These small business tax tips will help you feel more confident going into the New Year. Sufficient tax knowledge makes you more prepared for your tax bill. You can then focus on your business and serving new customers.
Want more small business tax tips? Make sure you read more posts from this blog.