6. Look into outsourcing some of the functions of your business. Contractors can be less expensive than employees. Here again, you need to make sure you’re following the law. If someone working for you shows up every day when and where you say, they’re probably not a contractor; they’re an employee. Some functions of your business are great opportunities for outsourcing, but others will require employees.
7. Pay your family. If you have a family business, you can split your income with your spouse and your children. This may allow you to move some of your income around from a higher tax bracket to a lower one. Here again, there are specific rules about how paying your children or your spouse works, so make sure you talk to a tax expert to make certain you’re following those rules.
8. Plan for taxes throughout the year. Many small business owners don’t think about taxes until it comes time to file. Spending a couple of hours at the end of each month gathering receipts and looking at your overall tax situation can help you see a lower tax burden. This is especially important in December, as there may be last-minute purchases you wish to make before the tax year ends.
9. Pay your taxes on time. Asking for an extension doesn’t reduce the interest and fees you’ll need to pay if you owe. Make sure you pay your taxes when they’re due. If you’re required to do so, make sure you’re making your quarterly estimated tax payments, as well.
10. Seek out expert advice at tax time and throughout the year. Tax laws are constantly in flux. There are experts out there who know what’s going on in the world of small business taxes. Put their knowledge to work for you. Consider meeting with a tax adviser each quarter, rather than just when it’s time to prepare your taxes.
Don’t pay more in taxes than what’s absolutely necessary, but don’t risk being dishonest, either. Follow each of these simple tips and you’ll realize legitimate and significant tax savings year after year.
Dominique Molina is President of the CertifiedTaxCoach.org, a professional organization that helps tax professionals deliver thousands in tax savings to their clients. Dominique has compiled many resources for members including a tax-specific engagement letter, multiple accounting templates that help expedite routine tasks, and powerful accounting marketing guides.
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