5 Incredible Ways to Reduce Small Business Taxes
Running a small business can be a demanding endeavor. The small business owner wears many hats and the last thing you want to do is to pay too much of your earnings in taxes to theIRS. As a small business owner there are many ways to reduce your taxable liability and keep more of your hard earned money in your pockets.
If you need ways to reduce your tax burden this year, consider some of the following methods to do just that. However, always consult a tax professional before taking action on any of these suggestions.
- Employ a Family Member
Hiring of your children â with this strategy small business owners are able to pay a lower marginal tax rate, or eliminate the tax on the income paid to their children. Their salary can be put in a Roth IRA for future purposes thus allowing you the tax benefit plus a way to provide for their future needs.
Hiring your spouse â taking into consideration the benefits they have through another job; you may be able to put aside an amount in retirement savings for them thus reducing your tax liability.
- Start a Retirement Plan
- Saving Money for Healthcare Needs
There is a triple tax advantage of establishing a HSA
1) You can claim a tax deduction for contributions you make to a HSA,
2) The interest or other earnings on the assets in the account are tax free,
3) Distributions are tax free when withdrawn for qualified medical expenses.
- Change Business Structure
In certain circumstances, just by changing your business structure you can eliminate the employer half of those two tax responsibilities. There are many things to consider in this change, such as paying yourself a reasonable salary and other associated risks, but it can be a good way to reduce your taxable responsibility.
- Deduct Travel Expenses
The Bottom Line
With wise planning, you can reduce your small business taxes and keep more of your money working for you. Just remember to consult a tax professional first to make sure you qualify for the potential savings discussed here.