Corporate tax is a sure way to watch your small business’s profits melt away, making April a dreadful time to be a business owner. Twenty-one percent of your brand’s income goes toward corporate taxes, and you’re leaving money on the table by filing your business taxes alone.
You can make corporate tax work for your brand in several ways, but you’ll need proper guidance and tax tips to increase your savings. Working with tax consultants is an excellent step toward filing taxes and maximizing returns.
The good news is that you’ve come to the perfect place to learn seven helpful tips for your business tax preparation. Continue reading to make your next tax season a stress and headache-free experience today!
1. Track Your Expenses
It’s extra work and can lead to frustration, but tracking your business expenses is essential when preparing to pay your company taxes. Tracking your expenses helps you know which expenses are qualified for tax deductions. Keep receipts from each eligible purchase and use them when filing your corporate tax payment.
Eligible expenses include commercial property rent, utilities, and costs related to your business functions. Meals and hotel stays are significant expenses you can deduct.
It’s best to start a file where you can store your receipts. You’ll need the receipts to justify your deductions when preparing for tax season. Having them in an accessible file will save you money and headaches.
2. Separate Your Expenses
A significant struggle small business owners face is learning to separate personal and business expenses. You’re opening the door to more deductions when you separate the two for tax season. Business deductions differ from personal deductions when filing with help from tax consultants.
You’ll save money from your personal taxes when filing with the IRS. Your business will also benefit, and you’ll enjoy a straightforward process of accessing the deductions you’re eligible for. It’s one of the best corporate tax tips that new business owners neglect.
3. Manage Inventory
Inventory also plays a role when you’re filing corporate taxes. Knowing the value of goods in your inventory will help you save money when tax season arrives. You’ll stay on budget and know what to report when filling out tax documents for your brand.
Inventory values change as products spend more time sitting in your warehouse. As the value decreases, you’ll accept that you’re taking a loss on the investment in those products.
It sounds like a negative situation, but you can report those losses on your tax documents. They’ll lower the taxable income and help you save more money to invest in your brand’s growth. Speak with an sr&ed consultant to get the guidance and advice your company requires.
4. Hire an Accountant
Hiring an accountant or tax consultant takes a significant and stressful task off your shoulders. Most business owners are managing multiple facets of the company simultaneously. Attempting to manage accounting for the business is a bridge too far for many owners.
Your tax consultants will help you track your expenses and inventory. They’ll use their knowledge and expertise to keep your books in order and help you enjoy an easy tax season. The professionals will also monitor tax code changes and how those changes affect your finances.
You’ll have time to invest in other parts of running your business. You can use that time to build a better marketing strategy instead of sorting through and filling out complex tax documents.
The tax consultants will help you find deductions and tax credits you didn’t know existed. It’s a fantastic investment if you’re hoping to save money on your business taxes. Let the experts handle your tax preparation and save you money on your corporate tax.
5. Make Quarterly Payments
The best businesses use quarterly payments to the IRS based on income projections for the calendar year. All business owners are expected to file quarterly. Opting to file once annually opens the door to hefty penalties from the IRS.
It’s vital to remember that no one withholds taxes from your paychecks. Your quarterly payments are your way of withholding income for your business. Missing a payment during tax season or throughout the year can result in a sizable fine from the federal government.
Put reminders in your phone and computer to help you stay on top of your quarterly tax payments. It’s the best way to remember to send them on time.
6. Track Employee Wages
No matter the positions you hire them to work in, tracking each employee’s wages at your company is essential. The wages you pay annually are part of your business expenses. You can deduct these expenses from your taxable income to lower your tax burden and save money for your company.
Start by keeping records for each payday throughout the year. You’ll know how much of your company’s money went toward paying labor. Your tax consultants will use that information to help you save money through tax credits and deductions when paying your corporate tax.
It’s an effective way to lower your tax liability. You can use that money to develop new products or retain your best employees.
7. Monitor Your Personal Income
Your personal income is another factor to monitor when reducing what you’ll owe in corporate tax payments. The best way to save money on taxes is by reducing the income the IRS can tax.
Consider using your personal income to make sizable contributions to retirement accounts. Most retirement contributions aren’t taxed, helping you save money for retirement without facing hefty taxes. You will only pay income tax on your contributions once you withdraw from the account.
Make Your Corporate Tax Work for You
Corporate tax is a phrase many business owners dread hearing as tax season approaches. It’s a time when businesses hand more money to the state and federal governments.
Using hacks for your business taxes is a fantastic way to save money, and it starts with tracking business expenses. You can also track what you pay employees to deduct that money from your taxable income.
Paying company taxes is a stressful experience, but you can overcome it with help from tax consultants. Check out our Tech content for the best advice for growing your brand today!