To minimize your small business taxes, tax preparation plays an important role. You want to organize your documents and update your tax strategy, no matter if you are doing the work or if you have help from a professional. This allows you to save your hard-earned profits as you take advantage of tax policies designed to help. Today, we at Mark Dicus & Company would like to elaborate on the subject.
Business Structure Tax Comparison
You need to know the form of businesses such as Contractor, Partnership, LLC, Sole Proprietor, or Corporation. There are specific tax forms required for each business type. To save you thousands in taxes and even more in headaches, selecting the right form of business is essential.
Statements, Receipts & Records for Income & Expense Reports
Collect your income and expense records for the year. There is a full list here https://www.irs.gov/pub/irs-pdf/f1040sc.pdf if you need help with the specifics, but typically, you need the following:
– Travel expenses, such as mileage, gas, tickets, meals
– Materials and supplies, like product materials, office supplies
– Professional and legal services
– Insurance premiums
– Advertising expenses
Correct Tax Forms
Find and fill out the appropriate tax form. Be sure to read every detail on the form and its instructions if you are attempting to do it yourself. Many entrepreneurs make money-losing errors with depreciation, expenses, and deductions.
Hidden Business Tax Savings
You need to account for your income and expenses to explore where you can save for optimal outcomes.
Be sure you file your business and personal taxes separately if your business is a company or corporation. Where some need additional forms such as the K-1 form for partnerships, all other forms of business file with their 1040 and a Schedule C form.
Tax Saving Tips for Small Business Entrepreneurs
There are some excellent ways to save on your business taxes when you are organized and knowledgeable about taxes. Below are a few examples:
– Bad debt write-offs
– An IRS qualified retirement fund set up.
– Deduct some charitable donations for some corporations in few circumstances.
– Create gifts or bonuses deductions.
– Advantages of scheduling income or expenses into the appropriate year
– Advantages of available tax credits for providing employee benefits, hiring practices for eco-friendly changes, and so forth.
– Equipment depreciation like vehicles, equipment, accountancy.
It is imperative that you follow properly and maximizing your benefits, which is why it is in your better interest to consult a tax professional in addition adhering to the specific requirements and limits associated with the above.
Businesses Taxable Income
Businesses do not pay taxes on revenue, just profits. To make sure you are paying appropriate taxes, focus on your Schedule C and get a true reflection of your profits minus expenses.
What Percentage Does a Small Business Pay in Taxes?
A tax rate of 19.8% is what the average small business today pays in taxes. According to the Small Business Association, small businesses with more than one owner have an average rate of 23.6% and those with one owner have a lower average tax rate of 13.3%. Under the new tax law, the corporate tax rate is a flat 21%, however, owners of a corporation also file individual taxes on their income.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
Ultimately, to ensure your business’s taxes are done efficiently to minimize your taxes, Mark Dicus & Company is happy to assist you!