5 Ways for Small Business Owners to Avoid Taxes
Tax season is drawing to a close, but it is never too early to begin thinking about next year’s tax filing. Proper tax planning is an ongoing effort, requiring diligence throughout the year to maximize tax benefits.
Now that tax season is ending, apply these tips to your small business to help reduce your tax burden in the coming year:
- Optimize Tax Elections
Consider company assets such as machinery, equipment, company vehicles, etc. and where they fit into your overall tax plan. For example, major purchases such as these can be written off in full up to a set dollar amount, but it may not be optimal to do so. If your company is just starting out, it may be wise to use depreciation now and save the deductions for the future.
- Track Your Carryovers
Carryovers are tax credits and deductions that cannot be fully used in the current year, but can be carried over and used for future years. Some of these carryovers may include general business credits, charitable contribution deductions, capital losses, and net operating losses.
- Know Your Adjusted Gross Income
Adjusted gross income (AGI), or modified adjusted gross income, is the benchmark that determines your tax breaks and tax liabilities. Lowering your AGI may provide additional tax incentives.
- Accountable Plans are a Must
With an IRS approved accountable plan, all employee reimbursements are company expenses, not employee income. If your small business in Dallas has employees that are reimbursed for travel, entertaining, personal expenses, etc., then using an IRS approved accountable plan is a must to avoid additional employment taxes.
- Take Tax Free Income from your Business
We are in no way advocating illegal activity, but rather using your business to your advantage. You may give yourself a loan through your business or set up a retirement plan, funneling income through tax-free channels. These fringe benefits are important ways to minimize your tax burden when tax time rolls around.
Interested in putting together a comprehensive tax plan for the year ahead? Give Bryan Polozola at NexGen Finance Solutions a call today at 214.629-010. Our team is expertly trained in all of your finance and accounting needs, with many years of experience in tax preparation, tax law, financial planning, and more.
Are you ready to meet YOUR new finance team?
