Paying taxes can seem like a burden to the small business owner. Every small business owner tries to reduce the payable tax amount and get maximum deductions. For this, they must keep account of bills and expenses properly and implement a well planned tax strategy.
Some small businesses do not have sufficient money for hiring the services of a tax consultancy firm. They have to handle most of the tax related matters on their own. Small business organizations spent around two workweeks are for settling taxation related issues. In the following, some easy tips for taxation have been discussed to help small business owners.
You can hire a payroll service
A business owner has to keep a tab of several details like the federal, state and payroll taxes for his or her employees. It is one of their prime responsibilities and neglecting it will result into trouble. As a business owner, you also need to find out social security and Medicare taxes.
Calculating all the taxes and reporting every new employee you have hired can be a confusing and tiresome task. It will take up lot of time as well. Using a payroll calculating service will give you the opportunity to make better use of your time. Payroll services calculate the payroll taxes of your employees and keep track of other essential details automatically and efficiently.
Try to qualify for healthcare tax credit
You can get up to 50% health care tax credit by meeting some simple criteria. The annual wages per person for your employees have to be below $50,000. You cannot employ more than 25 full time employees. You may hire part time workers who will do your jobs for lower wages. Your company must provide 50% or more premiums for the self-only health insurance of the employees. The health insurance for employees has to be purchased from Small Business Health Options Program Marketplaces.
Be vigilant regarding expenses
From the very beginning of a financial year, you will have to stay on guard regarding expenses. Reducing expenses and keeping a tab on every expense will help you in cutting down the tax. Save all the bills throughout the year. Accountability can help you save money on tax bills. You can get a credit card for your business alone. This way tracking the business expenses will be easier.
Make sure not to mix personal and business expenses. If you take your family along with you for conventions and trade shows then the auditor may not ask about the airfare expense but they will surely raise brows over pleasure trip expenses.
Take advantage of home office deductions
The small business owners who have set up their office inside their home space should make good use of the simplified deduction method. In this method, every square foot of space has to estimate at $5. 300 square foot is the maximum amount of space that you can utilize in this method. You will also have to keep tab on utilities, maintenance, and mortgage interest.
Look for opportunities
You have to try and find opportunities for deductions. For example, the money you spend in setting up your business is considered to be capital investment which opens up the opportunity of deduction worth $5,000 in the first financial year. Also, check out the Small Business Jobs Act Tax, which has launched around 20 initiatives for reducing the burden of tax from the shoulders of taxpayers.
Taxation can be troubling for small business owners as they grapple not just with the amount, but also the time spent in getting the documents and process ready.