No matter what type of business you own, chances are that your stress levels get a little bit higher when tax season begins to rear its ugly head. If you don’t explore all of your options and make the best decisions for your business, you face the unfortunate reality of paying more taxes than you might need to. There’s a rather impressive list of tips and techniques that business owners can use to help decrease their taxes. Take a look at a few below.
1. Cost Segregation
If you own commercial real estate, you can benefit from cost segregation. The result will come as a reduction in income taxes, with the amount of your savings depending on a number of factors. The more you’re paying for your property, the higher your potential for savings. You’ll need to make sure that you can pass an IRS audit for these deductions, which is why it’s highly recommended to look into hiring an experienced and qualified cost segregation company to take care of this process for you.
2. Hiring Techniques
Depending on the types of employees you hire and how you hire them, you could be opening your business up to some tax savings. For example, if you hire an unemployed veteran, you could be entitled to a work opportunity tax credit. Using independent contractors in place of employees can save on payroll taxes. If you have children, you can hire them for odd jobs instead of simply paying them for allowance, then deduct the cost of their salaries.
3. Umbrella Company
An umbrella company is an LLC or other type of corporation that acts as the “parent company” to all of your ventures and start-ups. When changes need be made, you can make changes to the umbrella company without needing to alter status or paperwork for the individual ventures that lie underneath the umbrella company. This process can save you extensive time and money on taxes because the umbrella company pays taxes one time for all ventures contained within it.
4. Business Insurance
Many small businesses look at business insurance as an unnecessary expense, mostly because it seems too costly to justify against their earnings. However, business insurance can be a great investment. It does provide critical coverage in the event of an emergency that could make most businesses go under. Additionally, the monthly premiums for business insurance are tax-deductible, which can help create a lower tax rate to prevent from going under.
There are a virtually limitless amount of techniques your business can use to save money on taxes. Do your research and consult a professional to help get the best results for your business.