Simple But Effective Business Tax Planning Strategies

Businesses are among the most significant payers of taxes in the United States, with the IRS collecting nearly $476 billion in tax revenue from US businesses in 2022. Paying taxes is part of your responsibility as a business owner. It’s one of the most significant business expenses to account for, so you’re prepared when April arrives.

The idea of handing over more of your hard-earned money in business taxes to the IRS is disappointing, but there are several methods you can use to minimize your tax burden. The best business tax planning strategies will help you manage your money and enjoy the discounts and deductions you deserve.

The good news is that you’ve uncovered this beneficial resource for the best tax reduction strategies to minimize what your small business pays to the IRS each year. Continue reading to find the best ways to save money on your small business taxes today!

Hire Family Members

One of the classic ways to lower your tax burden is to hire family members to work for your small business. It’s a practical and legal way to decrease your tax burden as a business owner. The Internal Revenue Service provides several methods to hire family members and lower what you’re paying in taxes annually.

Hiring your children to shelter more of your money from the IRS is also possible. The income you pay your children has a lower tax rate than income paid to other employees at your company. In some cases, the IRS eliminates the taxes you’d pay.

If you’re operating a sole proprietorship, your children’s taxes are immune to Social Security and Medicare taxes, another win for your budget. Ensure the earnings are justifiable for your business to enjoy a tax break by hiring family members.

Account for Your Business Loans

You must account for your business loans when seeking to save money on your taxes. Tracking your business losses is one of the most effective ways to decrease what you owe to the IRS. You can deduct your business losses from your income to lower the money the IRS can tax you.

If it’s been a challenging year, you can lower what you owe in taxes by thousands of dollars. Accounting for loans and losses is the best way to save money when preparing your taxes. It’s more effective than using your deductions and tax credits to save money.

The standard deductible options are charitable donations and home mortgage interest. Your business loans and losses will increase your savings and help you save money annually.

Track Your Travel Expenses

Track your travel expenses when you’re traveling for business purposes. It’s an underrated way to save money by using business expenses for taxes to lower your debt. Most business owners know that you can use business tax planning strategies that help you deduct the cost of airline tickets and gas mileage. Still, you can deduct several other travel expenses.

Travel is vital to reenergize your business and gain new insights to help you grow. It’s essential for business and personal growth, and you can use it to save money on your taxes each April. The IRS will allow you to write off most of your travel expenses when operating a small business.

You can deduct the expenses from your taxable business income if they are business-related. Travel by bus, train, plane, and Uber are all expenses to remember for tax reasons. Your accommodation and meals are also 100 percent deductible if you use them for business purposes.

Manage a detailed record of each trip you take for business purposes. Lodgings are 100 percent deductible, so keep your receipts from the hotel and Airbnb stays. The only rule is that you can’t disguise a vacation as a business trip.

Account for All Expenses

Accounting for all your expenses is an excellent way to lower your tax burden when preparing your payments to the IRS. Two overlooked aspects business owners need to remember to account for are rent and utilities. You can save thousands of dollars in taxes by recording what you’re paying in rent and utilities to run your business.

Look for every business expense when compiling your small business taxes. These expenses will come in handy when negotiating with the IRS. The rent you pay for your office space, the electric bill for the building, and the internet bills will add up as the year passes.

Those expenses are deductible if you’re paying for services related to your business needs. Accounting for these expenses is one of your company’s best simple business tax planning strategies.

Hire a CPA

When operating a business, a reputable CPA will do wonders for your tax savings. They’re up-to-date on the latest tax code and changes to the law, and they’ll ensure you’re compliant to help you avoid unwanted IRS audits. It’s best to research when seeking a CPA to work with your company.

The best CPAs have long track records of success in the industry. You will be aware of vital details when preparing and paying your taxes. A reputable CPA’s trained eye will help guide your business and save money that can be reinvested into future business operations.

You can write off childcare expenses and health savings to spend less on taxes. Every penny counts when hiring business tax services to help you save money. It’s worthwhile to find a CPA to run the numbers through a business tax calculator and look for ways to save your brand more money.

It’s also the best way to ensure your taxes are filed correctly. You risk heavy fines and penalties if you file taxes without a certified professional’s help. CPAs will cost you a bit of money, but they’ll save you thousands if you hire the best one.

Deduct Assets

Donating assets to charity is one of the oldest options to consider if you want to lower your tax burden as a business owner. It’s beneficial for the local community since you’re investing money into helpful programs. It’s also a fantastic way to reduce your debt to the IRS.

You’ll prove your brand’s loyalty to making a difference in the community while saving money simultaneously. It’s the best of both worlds for a small business owner. Find a charity that resonates with what your brand stands for.

Share that information with your customers to help them get on board with donations. You’ll enjoy loyal customers and a stronger bond with your community while saving thousands of dollars in taxes. Everyone comes out ahead when you’re using these business tax planning strategies.

Track Each Receipt

Your organization should use a form of business accounting software to track expenses and gauge how much you’re spending on business-related expenses. Recordkeeping and receipt tracking makes life infinitely more manageable when you’re tax planning. You’ll know what you’ve spent on business expenses and how much money you’ve made over the past year.

A disorganized business is likelier to pay more than they owe in taxes, and you can’t count on the IRS to look out for your best interests. They’ll be happy that you paid more than you owe.

Tracking thousands of receipts from across the year is challenging, but the best tracking software makes it simple. You’ll input each receipt as you receive it. It’s the best way to monitor and add the expenses you’ll deduct from your taxes in April.

Utilize Retirement Plan Contributions

Retirement contributions are another trick up your sleeve when using business tax planning strategies. Maximizing your retirement contributions is best to enjoy more significant tax benefits. Much of what you’ll save depends on how much your employees contribute, but putting tens of thousands of dollars into a 401(k) is wise to increase your savings.

Working with your CPA to maximize those contributions and enjoy their benefits is best. The CPA will determine your eligibility and the limitations of putting that much money into your retirement plan.

Form an LLC

Forming an LLC with your small business is another fantastic way to save money. You’ll enjoy tax advantages that other companies don’t get to take advantage of. You can use the Pass-Through method to decrease what you owe in taxes to the IRS.

The Pass-Through method helps you pass business income into your income as the owner to enjoy a lower tax rate. It’s the best way to avoid double taxation when filing annual taxes. It helps with significant savings when paying Social Security and Medicare taxes.

Try These Business Tax Planning Strategies Today

The best business tax planning strategies help you save money when you file your annual business taxes in April. You can lower your tax burden by hiring family members or forming an LLC with your small business.

Track each travel expense for your company and use receipt software to keep your expenses organized. Deduct your assets by donating to local charities, and hire a reputable CPA to maximize your savings with small business taxes.

Learning to manage your business taxes is a heavy burden for most business owners. Find the best tips and tricks to grow your company with our illuminating and engaging Business blog content today!


What to Do If You Need an Emergency Root Canal


Will Teeth Whitening Affect the Enamel?