5 Tax Planning Strategies To Save Money In Your Business
Are you dreading your tax refund this year? Well to prepare for more savings next year, we can help you plan ahead this year with a tax plan.
A tax plan is designed by a Certified Public Accountant (CPA) of a customized tax saving strategy that legally shelters your business income from tax. Our goal at NextGen Tax is to keep more money in your pocket and to give less money to the IRS. It ultimately gives you more control over how you spend your money.
Did you know that the amount of taxes you owe is based on your business’ financial situation, including how much you earn, how you earn it, and how your expenses are structured? To change your tax bill, you will need to change one or more of those variables as well.
When you craft a tax strategy with NextGen, you’re creating a system that allows you to keep more of your money to build wealth faster.
Here are 5 key strategies to save money in your business:
- Bookkeep Like The Pros
Although tedious, it’s important to stay updated and document your bookkeeping for your records, in the case of an audit. It’s important that you reconcile your balance sheet accounts. As well as, review your balance sheet and profit and loss statement to catch any errors. By doing this, you will be able to save more money throughout the year with deductions.
2. Proper Documentation Of All Business Aspects
Do not skimp out on detailed documentation in bookkeeping and other areas of your business. Proper documentation ultimately supports your financial statements and assists your tax advisor in creating your tax planning strategies. Your documentation can include:
- Personal and business loan details
- Mileage log
- Contracts and agreements between your business
- Receipts
- Activity log
- Receipts
3. Hire Your Young Children
Did you know that your children’s salary is tax deductible if you hire them within your business? That’s right! Even their income will be taxed at a lower rate than other salaried incomes. In the US, children have a tax bracket of 10% to 12%, which is far lower than that of their income-earning parents, and a standard deduction of $12,000.
4. Consider Personal Loans
Many people are unaware that taking money out of a company or piece of real estate in the guise of a legitimate loan is one technique to lawfully avoid paying taxes. The loan money obtained in this manner is not taxed. Make sure the loan is properly documented and that you pay the principal and interest as specified in the loan by working with your advisor to ensure that these things happen.
5. Review Your Business Entities
Entrepreneurs frequently start a business as one kind of entity with the intention of switching to another type after the company has made a particular amount of money. But, in the rush of running a growing business, it’s simple to forget to make the changeover. One error could cost you money. Reviewing your entities annually should be a component of your tax planning approach. Your taxes and the process of preparing your tax return can be considerably impacted by the addition or removal of an entity, a change in status or ownership, or any of these events.
Ultimately, there are numerous ways to save you money within your business. At NextGen, we create a personalized plan for our clients. Want a customized and detailed tax planning strategy for your business? Then call us at 918-600-2299 to speak with a tax professional today!