The downside of all of this anxiety is that you might not even save any money on all the expenses you had! Every business owner is interested in saving time throughout the year and making sure they save the most they can each year. The below tax-saving strategies are perfect for business owners!
NOTE: I am not a tax accountant or Certified Public Accountant, I just happen to work with many and have gotten this list from them! Always check with your current CPA to ensure you are making the most you can each year!
1. It Might be hard to Believe that Prepping for Retirement is a good thing!
As a small business owner, it might sound crazy impossible to even think about putting money away into a retirement fund. By putting money into a retirement plan, you could qualify for a tax credit called “Saver’s Credit.” Consider looking into one of these three types of retirement funds that could ultimately save you money: SEP IRA, Simple IRA, or a 401(k)! Just think, you’ll be preparing for your future and saving your money in the present too!
2. Giving Money Helps you save money!
Donations to different charities can be used as a tax credit to help save you money. You will want to keep an itemized list of everything you donated as well as where you donated the items to. Make sure to get a receipt from the location you donated to for your records in case you are ever audited!
3. Hold off on Invoicing Clients!
If you are expecting that you might make less money next year, it might be a good idea to hold off on sending out some invoices until the new year. This helps lower the amount of income that can be taxed on during your current year. Just make sure to send out those invoices as soon as it’s the new year that way you are still getting paid for all the work you did!
4. It May be Time to go See your Doctor!
Although this shouldn’t be a question, some people don’t see their doctors as often as they should! Those doctor’s bills, as long as they don’t exceed 10% off your gross income, could be used as a tax reduction strategy! There are also some credits that can be used based on what you went to the doctor for. Be sure to talk to your CPA about these options!
5. Go Back to School
The idea of going back to school might be a little scary, but in the long run, it’s actually saving you money! By signing up to learn a new skill, you can be eligible for many different credits on your taxes. This is a great way to learn something new within your business or your field while still saving on your taxes!
6. Prep for your Baby’s College
Contributing to a 529 or other college savings plan works much like contributing to your own retirement plan. Putting money away gives you the possibility of multiple different tax credits and helps your child get more money too! There are different tax credits for this each year, so be sure to talk to a CPA about how much you might be able to get.
7. Contribute to an HSA
If you don’t know what an HSA is, this is known as a health savings account which helps you pay for different medical bills or medication. This is especially helpful for anyone with a high deductible medical plan that could use savings right away too! You are able to save up to a certain amount depending on your medical plan and then use this amount to help pay for medical bills without being charged taxes twice!
8. Review a list of Deductions!
There are many websites that list of different types of deductions you might be able to get as a business owner. Make sure to read through as many as you can to find out what you might qualify for! Check out this one for example!
9. Working from Home? Deduct that.
One of the biggest benefits a lot of people have seen within owning their own business is that you can deduct certain expenses for your home office. This includes internet expenses, phone expenses, and even electricity!
10. Get Professional Help
Although you might think your taxes are simple, having a professional look over everything is always the best option. As a small business owner, I recommend getting someone to handle your bookkeeping throughout the year. This helps make sure someone is looking at how much you are making and if there are any tax-deductible opportunities. Then, once the year is over, get a CPA who can look over any other credits you might be eligible for! There are always things you might not know about that can save you a lot in the long run!
All of these items can help you save money in ways that you probably haven’t thought of. Ultimately, a CPA and a bookkeeper are the best ways to ensure you are saving money everywhere you can within your taxes each year!
Interested in hiring a bookkeeper or CPA and don’t know where to start, send an email to Rachel@bookkeepersforsmallbusinesses.com!
