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25+ ways to save time and money this tax season

Image Source: Andrey Popov, Adobe Stock.

Most people do not enjoy preparing taxes, filing taxes, or meeting with accountants. For small business leaders, it is their #2 dreaded task, only ranking below making cold calls, according to an Adobe small business survey.

But taxes are a small business owner’s biggest expense. Think about it – between federal and state taxes, a small business owner will pay anywhere from 20-30 percent of their income on average. Considering that 41 percent of small business leaders reported seeing decreased revenue last year, most can’t afford to not focus on minimizing tax costs.

My advice? Meet with accountants at least two-to-three times a year and ask about these 25 things that will potentially create big cost and time savings.

1. Saving by buying equipment, furniture, and computers. Businesses that are eligible can write off up to $1M of capital expenditures (equipment, computers, machinery, etc.). Under Section 179 of the tax code, small businesses receive a deduction immediately and finance the costs instead of paying right away.

2. Saving through innovation. Some small businesses qualify for the Research and Development Tax Credit. It can be used for developing or improving a product or process, particularly if the process involves chemistry, engineering, or software development. There is a calculation that must be performed and since it can be complex, accountants may recommend an outside firm. Remember, this is a credit, not a deduction. That means businesses can offset the amount against taxes owed. Even if they do not owe any taxes, they can carry it back or forward.

3. Saving by hiring family. Some small business leaders can put their children on payroll and take a deduction for the cost if the child has no other income. The child may not even have to file a tax return depending on how much is earned. A middle school or high school child that can perform legitimate services (filings, moving, paperwork, data entry) can be put to good use. They can learn a few good work practices and earn a few bucks for their savings.

4. Saving on bad receivables and inventory. Small businesses should be diligently writing off bad receivables and inventory. Show accountants the businesses’ receivables ledger and walk them around inventory. If there are receivables hanging around for more than 90 days, then write them off in the books. The same goes for old inventory – dispose of that stuff. They can’t be deducted until they are removed entirely from the books and premises.

5. Saving for higher education. Small business leaders can start a 529 plan for themselves and their employees. Available in all states, this plan helps put after-tax money away into a savings account. It will grow tax-free to be used for higher education expenses such as tuition, room, board, books, and many other related items. Check with an accountant for a recommendation.

Taxes eat up a giant share of small business profits, but with the right planning, there are steps that can minimize expenses and produce more savings. For my other 20 tips? I share these – and more – in this virtual presentation.


Take the hassle out of personal tax prep

Are you looking for ways to simplify and maximize personal taxes? Here are a few …….

Source: https://www.marketscreener.com/quote/stock/ADOBE-INC-4844/news/Adobe-25-ways-to-save-time-and-money-this-tax-season-39755970/

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