A lower tax bill is helpful in improving the profitability of the company. Taxes can be optimized with very simple tips and tricks, but the planning has to be done in advance. Here are some useful tips to manage your taxation more effectively.
Hire Freelancers and Contractors
Hiring freelancers and independent contractors help you save on payroll taxation. Although all employees of the business cannot be independent contractors, you can hire the ones that can be managed easily. This can also help in focusing on the core business activities.
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Make Use of Tax Deductions
It is important to be aware of all kinds of tax deductions and ensure that all deductible expenses are recorded properly.
Maintain Financial Records
Hard and soft copy of all expense reports must be maintained. Maintaining all expense records using an expense management solution is helpful. Travel and other expenses if recorded properly will help in easily managing finances.
All methods to reduce the tax burden must be reviewed a month before the year end. Here are some ways to reduce tax burdens, while approaching the year end:
- Contributions to charity
- Buying business equipment
- Shifting income from one year to the next
There are specific types of employee benefits that are tax deductible. One can plan the employee benefit structure to include such benefits as ‘fringe benefits’ and healthcare so the tax deductions can be availed.
New Business Deduction
If you are a startup organization, then the expenses incurred in starting up the organization are tax deductible. The expenses are tax exempted upto a limit of $5000.
These are helpful in improving the amount of tax deduction. All internal and external meetings are deductible for up to 50% of the meal costs. This can add to a considerable amount of savings, if calculated on an everyday basis.
Health Care premiums of those who own sole proprietorships and partnerships are tax deductible. One can claim the deductions while filing tax returns.
Use An Online Invoicing Solution
An online invoicing solution is helpful in managing small business taxation efficiently and effectively. A solution like Invoicera has the following useful features:
- Expense management and expense recording
- Adding all kinds of taxes to invoices and recording all the taxes
- Tax reports and expense reports for filing of returns and detailed analysis