As a small business owner, you want to make sure that you turn a profit and are able to keep your business going. Part of keeping your business running effectively is understanding properly how to reduce your small business tax responsibility through actions you can use to reduce your tax liability. Whether you hire a small business bookkeeping service or keep your own books in-house, these tips can help.
Spend Money On Training & Education
It is important to have well-trained and educated employees. Don't skimp on professional development for either yourself or your employees. If you are able to afford it upfront, send your employees to professional development classes, seminars, and conventions within your field.
All of the education expenses that you incur for yourself and your employees are all investments that you are making into your business. They are businesses expenses that you can deduct from your overall profit and thus overall taxable income. Keep track of all education expenses, as they can help reduce your tax bill.
Donate When You Can
As a business, there are lots of opportunities for your to donate. If you have equipment or inventory that you don't need to use, you can donate that equipment or inventory to a group that could use it. If your company makes a particular product, you could donate that product to organizations that could use it. If your company is able to donate other resources, that can be useful as well.
When you make donations, just make sure that you get a receipt to back up the donations that you made. You need evidence to support all donations that you make. Once again, you can write off donations and reduce your tax liability as well via donations.
Keep Track of Vehicle Miles
Next, as a small business owner, it can pay to use your vehicle for business. First, invest in a car magnet for your business so that you can actually claim that your vehicle is for business.
Then, create a log so that you can write down all the miles that you put on your vehicle that are business related. In this log, you should write down the date, where you drove, for what purpose you took the trip, as well as the overall number of miles.
Make sure that your driving log has an envelope where you can place receipts for tolls and other vehicle expenses.
If you want to lower the taxes that your small business pays at the end of the year, you are going to want to make sure that you are keeping track of the actions that you can write off, such as educational expenses, donations, and vehicle usage.