Planning a good tax strategy is crucial for running a small business. Our experts at Corporate Business Solutions routinely offer professional help for smaller companies to develop a sound tax strategy for the long term through one of our affiliated companies which specialize in strategic tax planning. While it’s highly recommended that small business owners hire an knowledgeable firm with experience in strategic tax planning to develop a tax plan, there are some things the owners should also do. Here are several easy tax tips all small business owners should follow:
Track All Expenses – Do not forget to keep very close track of all business expenses for the whole year. Keep a record of expenses regardless of how small they are. You should record income and expenditures as soon as they happen, so you don’t forget to do so in a timely manner.
Keep Business and Personal Expenses Separate – This may sound like a no brainer, but some small businesses often struggle to keep up with this fundamental rule. Small companies are informal atmospheres. So it’s easy to get personal expenses mixed in with business ones. But avoid doing so at all costs. It can complicate your tax strategy. In addition, failure to keep personal and business expenses separate is one of the key issues which can allow a person suing the company to pierce the corporate veil to go after personal assets in collecting on a legal judgment.
Offer Social Benefits to Employees – Offering care benefits to employees, like health and dental, can actually reduce the tax burden for small companies. Therefore, worker fringe benefits should be considered as part of an overall compensation plan.
Get Trainee Deductions – The tax code allows businesses to deduct certain educational expenses needed to train employees and improve overall skills in the workplace. You can get tax deductions for things like attending seminars and fees spend for conventions.
Take Mileage Deduction over Auto Expenses – Mileage deduction is more advantageous especially when gas prices go high. So, if you are facing a choice between mileage deduction and an auto expense deduction on your form, consider the benefit of choosing mileage.
Donate Unused Inventory for a Deduction – If you have unsold inventory, donate it to a recognized charity instead of storing it in a costly way. Small businesses can claim tax deductions for donated inventory. Do keep thorough records of donated inventory because documentation is needed to get the deduction.
The above are a handful of simple things you can do to reduce the tax burden at your small business. Contact a CBS Corporate Business Solutions expert to develop a more comprehensive tax strategy for your company.