In order to maximize your profits, it's important to make sure you save as much on your taxes as possible.
Small business owners frequently find themselves forced out of the marketplace due to exuberant tax rates which are impossible to keep up with. While there's relatively little that the average Joe can do to impact the overall tax rate they're going to pay, there are a number of helpful tips that can help entrepreneurs mitigate their overall tax burden. A number of tips related to writing off certain equipment on your taxes and seeking out special tax loopholes are regularly missed by small business owners.
From carefully writing off certain equipment to more carefully regulating your receipts, here are 10 tax-saving tips that many small businesses always miss.
Bolster your expense tracking
Far too many business owners are getting a bad deal on their taxes because they’re failing to keep an accurate or comprehensive track record of their expenses. In the digital era, it's become all too common for business owners to maintain shoddy digital records which can be a nightmare to sort through. Rather than hiring an expert to pour over your voluminous records, you should be taking steps to make your expense tracking as easy and simple as possible. In doing so, you'll end up reaping huge tax savings in the long run.
There are many different expense trackers you can use, as digital software is now easier and more affordable than ever before. Small business owners who fail to invest in good expense tracking are shooting themselves in the foot when it comes to paying taxes.
Target easy tax deductions
Many entrepreneurs are entirely unfamiliar with easy-to-obtain tax deductions that could end up saving them huge sums of money as time goes on. Certain high-tech gadgets, such as your smartphone, computers, and even certain software, can be written off to help save your company the money it so desperately needs.
If you have expensive hardware that you use for multiple years and can term a business asset, you could potentially save yourself some money by using it to claim a tax deduction. Do this across your entire company, and you’ll find that your previous investments in hardware and software don't have to come at an immense cost to your business' longevity.
Know what to deduct if you work from home
Now that everyone is working from home in greater numbers than ever before, it's important for small business owners and working professionals to know that you can deduct certain things which are essential toward your working from home. Expenses relating to your home office, including insurance or utilities like your internet service, can be written off in many instances.
Consider your travel
If you've been traveling for commercial purposes, take steps to ensure you're receiving the tax deductions you may be eligible for. Knowing how to deduct business travel expenses entails keeping very careful records of what you spent your money on. It’s easy to recall purchasing a plane ticket, but also ensure you’re keeping receipts from the restaurants and gas stations you visit as you travel, too.
Save money by becoming energy efficient
Did you know that there are tax credits for businesses and individuals who strive to become more energy efficient? Getting an HVAC rebate can help your business during this time of financial turmoil, and in doing so you’ll be confident that you’re helping the environment, too. Businesses that strive to go green can also leverage this in their marketing materials to appeal to eco-conscious consumers who want to support companies that care about the planet.
Besides paying attention to how you consume energy, you should also focus on your vehicles.
Writing off business vehicles
Writing off certain vehicle payments as a business expense could be the thing that allows your small business to expand its fleet. For many companies, delivery vehicles are more important in the era of social distancing than ever before. Knowing how to write off your mileage could end up being crucial for the overall commercial vibrancy of your business, so don't ignore this helpful tip if you want to save as much as you can.
Provide adequate facilities for the handicapped
Small business owners should strive to ensure their facilities are handicap-accessible. In doing so, they'll bring in new customers and show their local community that they care about those who they do business with. Additionally, providing adequate facilities for the handicapped can enable you to lay claim to certain tax credits which were created with the hope of getting more businesses to become handicap-accessible.
The disabled access credit is a helpful bit of tax relief for those considerate companies that care about all consumers. If you haven't made your facilities accessible, race to do so as quickly as possible.
Know about disaster scenarios
Has your business recently been involved in a disaster scenario? If so, you could be eligible for unique tax credits that are exclusively made available to commercial entities that are struggling to recover from recent flooding, fires, or other natural calamities. The IRS offers special tax help to businesses that have been swamped by a natural disaster, so be sure to visit their official web page to learn more about how you can claim these credits.
Don't let a natural disaster be the end of your commercial prosperity - take advantage of the IRS' disaster assistance program, and you'll be better off for it.
Be sure to hire veterans
Companies that hire veterans are making the right choice. Individuals who have proven experience in the military are good at following orders, know the importance of discipline and professionalism, and have demonstrated that they can coordinate their efforts with others in a team setting. In addition to making great employees, veterans also offer business owners access to unique tax credits which could save them huge sums of money in the long haul.
Hiring certain eligible, unemployed veterans will enable your business to lay claim to a Work Opportunity Tax Credit (WOTC), as you’ve helped someone in need get themselves back on their feet. There are specific tax credits for hiring veterans with disabilities related to their service, too. Business owners who hire veterans should ensure they’re claiming the tax credits that their companies are entitled to, as this money can eventually go back into the local community and help make your business even better.
Deduct your business insurance expenses
Finally, clever entrepreneurs will have realized the value of getting business insurance years ago, but they may be unaware that they can actually deduct business insurance expenses in many instances. Having business insurance is a great idea because it enables your company to keep its doors open even after a crisis has hit. Even better than that is the fact that certain small business insurance plans can be written off, as the government wants to encourage entrepreneurs everywhere to take steps to safeguard their own prosperity and the jobs of their employees.
Look into writing off business insurance expenses if you haven't already done so, and your business will be able to put that money to good use elsewhere. Fail to take advantage of this, and your company may never grow into its true potential. Keep all of these tips in mind, and your small business will soon be saving more money than ever before when it comes to your tax obligations.