Simple Tax Planning Strategies For Your Small Business

April 18, 2018

For your small business to succeed, it’s essential that you use tax planning strategies to lessen the amount of money that you need to pay to the IRS. Below are some simple tax planning strategies that you should be utilising, and for more detailed strategies, it’s best to seek professional help in the form of a tax planning and preparation specialist:

Make good use of expenses:

Offsetting your small businesses income with expenses is a key tax planning strategy sure to save you money, but it is most effective if you have a good idea of how much your business is likely to bring in at the beginning of the year. Having this information to hand enables you to devise a plan to maximize your expenses. Spending enough money on business expenses deemed legitimate by the IRS, is made much easier when you know how much money you are likely to earn and doing so should offset much the revenue.

It’s wise to construct a rough plan for this at the beginning of the financial year, and then as the year goes by you should be able to tweak the plan so that it comes into your line with your true levels of revenue.

Contribute regularly to employee retirement accounts:

This tax planning strategy involves setting up retirement plans for each of your employees and paying into it regularly; it is best done at the end of the year to ensure that your deductions are maximised. Contributions made to employee retirement plans can be fully deducted from their taxable income, and if you have succeeded in making a significant profit at the end of the year, then you should certainly think about maximising your contribution to the retirement account of each employee. Be sure to adhere to the federal limits on contributions to employee retirement plans, though; here is where a professional tax consultant can advise you better.

Green projects may lead to tax credits:

There are a handful of federal programs encouraging green projects, that your small business may be able to use to its’ advantage. Putting in place measures to lessen your carbon footprint or use alternative environmentally friendly ways of generating energy, for example, may lead to tax credits. Each program will have its own guidelines, so again, consulting with a tax professional is a good idea.

Think carefully about your investment strategies:

Selling any losing investments that your small business may have made, could help you to offset any gains that you have on the books for the year. If investments have been held for more than a year, you will need to think hard about the impact of capital gains taxes, and a qualified tax consultant can make sure that you make the best decisions for the future of your business.

Owning a small business can present many pitfalls, least of all when it comes to taxes, but having a professional tax consultant working with you all year round and helping you to utilise the best tax strategies, will certainly help to minimise any tax mistakes and maximise company profits.


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