Tax Saving Tips
Sadly, the COVID-19 pandemic has adversely impacted the health of so many individuals around the world. Due to the Coronavirus, millions of people have become unemployed. No matter whether a person was in business or had a full-time job, they are now unable to pay taxes due to the sudden unemployment. Taxes, however, are an inevitable part of our lives; we pay them for the welfare of our nation. In these miserable circumstances, take steps to save money on paying taxes. These savings can help you survive these rainy days. If you are a business person, then make a wise move by getting help from a professional responsible for tax preparation for entrepreneurs. Here are some of the ways such a professional can help you reduce your tax bills.
1. Boost Retirement Contributions
Save by putting money into a retirement fund. Investing in a retirement plan is a wise move, all the while saving you money on taxes. Contribute to your IRA and save money for that contribution at the same time! If you ever need that money, borrow from your IRA instead of taking a taxable distribution.
2. Claim Benefits from Mortgage Interest
Many people pay (primarily) nondeductible monthly rent over taking out a bank loan to buy their home instead. It is important to note that you reap a lot of benefits by taking out a home loan from banks or private lenders. Claim mortgage interest, a viable deduction from the property you live in and own.
3. Proper Recording of Cash Expenses
Many businesses are labor-intensive and pay wages in cash. If you don’t keep a proper record of money you are paying to workers in cash then, unless you equally collect income in cash and (unlawfully) under report it, you will end up paying huge taxes. It is important to keep a decent register of your cash movements, so that you don’t have to bear any unnecessary charges in the future – be they “good charges” (taxes) or “bad charges” (penalties and fines).
4. Follow your Spending and Track Deductions
For some people, it is a daunting task to keep track of their expenses. Most credit card companies do provide us with annual spending summaries. Get help from accountants that offer tax preparation for entrepreneurs and make sure to ask for their bookkeeping service as well. They will include tracking your deductible expenses as part of their full service to you.
5. Open a Health Savings Account
Save taxable income by contributing to a Health Savings Account “HSA.” Invest at least in a high-deductible health plan to save money on paying taxes. It could very well save you from ginormous medical bills in the future too.
6. Find ways to “collect” Tax Credits
Tax credits help you reduce your tax bill on a dollar-for-dollar basis. There is a separate tax credit for those who have hired a daycare or childcare service, for example. Ask your childcare provider for the costs you have paid them and keep the provider’s tax ID handy. Seek help from accountants providing tax preparation for entrepreneurs to know more about available tax credits for you.
7. Become energy efficient
If you have a business set up in your home, becoming energy-efficient can make a difference in your tax bills. Make your home energy-efficient and you will be offered tax credits on those purchases. Install new insulation, new windows and doors, and qualified heating and cooling systems. There are alternative energy sources, such as solar panels, which are also eligible for energy-related tax credits.
8. Stop ignoring Auto Expenses
If you are using your car for business purposes, then don’t forget to deduct it on your tax return. There is a list of questions you must answer before applying your automobile deductions, such as what percentage of your car mileage is attributable to your business. Calculate that percentage rate when gathering your information for your accountant’s tax preparation.
9. Deduct House Expenses if you have a Home Office
If you are working from home full-time or even part-time, deduct a portion of your household costs and report them as business expenses on your tax return. The home office is a space where regular business activity *exclusively* takes place. Don’t make your guest room your home office; instead, have a separate room from where you perform all business-related tasks exclusively. Ordinary home office type of expenses that can be deducted include mortgage interest, insurance, depreciation and utilities. Hire an accountant who provides.
tax preparation for entrepreneurs so you can focus on other important matters in your life.
10. Treat your Staff
Staff are the backbone of your business. There are certain things you can do for your team that will also help you save on taxes. Only a few business owners actually take advantage of this. Offer your staff dependent care benefits and paid family leave, which will benefit you as well: a happy staff member will yield productivity and cost-reduction profits for your business in the long run.
11. Surround yourself with an excellent Team
Hire team members you can rely on for those times when issues arise. That said, make sure you have an accountant who is not only trustworthy and approachable, but also an excellent financial advisor. Your accountant will be responsible for your tax preparation for entrepreneurs and will “leave no stone unturned” when saving you money on taxes.
12. Turn Charitable Contributions into Business Expenses
Give money to charity and, in return, use your good deed to promote your business. This is an investment to make in any industry. It will give you a significant benefit greater than any itemized deduction can reflect on paper.
13. Pay your Kids
There is nothing better than making your family members a part of your business. Deduct the amount your children take home from working in your company. Kids pay less taxes than you!
Follow these tips and save a great deal of money on taxes. Keep a record of every transaction you are undertaking to grow your business. These days, everyone is working around the clock to meet their business goals. Why not save money on taxes at the same time, then using that money to get one step closer to those goals? If you don’t want to waste your time (and frustration) with bookkeeping and tax preparation hassles, then hire accountants that provide tax preparation for entrepreneurs.