Filing for taxes is a daunting and confusing task. Even the smallest of mistakes can raise your tax bill significantly, lowering your net profits as a result. No wonder people find it to be very overwhelming and prefer hiring professionals to handle it.
Unfortunately, most small businesses don’t have the budget to hire an accountant or outsource tax filing. If you are also a small business owner with budget constraints, remember these few tips to reduce your tax bill, the next time you file your tax return.
1.Deductible Expenses
One of the first things that you need to learn is the list of business expenses you are allowed to deduct. These expenses vary depending on the nature and ownership of the business. Deducting every applicable expense can provide you a great start at controlling your tax bill. The whole list can easily be found on the IRS website.
2.Tax Regulations
Different tax regulations apply to different types of businesses. So, before you start preparing your return, update yourself with the prevailing tax reforms and laws that apply to your business. Many of these laws also vary from state to state and can incur hefty fines if ignored. On the other hand, understanding these laws clearly can give you more control over your tax bill.
3.Health Insurance
A tricky deduction to handle, but in specific scenarios, you are allowed to deduct health insurance costs from your income. And considering the cost of health insurance these days, it could give you a great advantage.
4.Contributions to Retirement Plan
Another deduction that you can benefit from is your contribution toward your retirement plan. However, the deduction is only allowed on specific plans and has a limiting factor to them.
These points are just the tip of the iceberg. Taxation goes very deep and can take years to understand completely. Nevertheless, the few tips shared here are sufficient enough to lower your tax bill, if applied correctly.
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