As a small business owner, you must be updated about tax to pay the correct amount every year. The US Federal government changed the tax code in 2021, which will impact small business owners in 2022.
Taxes are the least exciting part of doing business. However, paying no attention to preparing for paying taxes may cause severe penalties. Therefore, it is vital to qualify for tax season by arranging the financial accounts and business statements ready and organized throughout the year. So, the information you need to present for tax purposes should be at your fingertips. In addition, as a small business owner, you must know the strategies a company can opt for to minimize the delays.
Let us discuss some vital tips you as a small business owner may use and benefit from in your business taxation.
Top IO Tax Saving Tips For Small Business Owners In 2022
These top 10 tax-saving tips will enable small business owners to take a step toward tax-effective planning.
Tip 1: Be Serious About Bookkeeping
As a small business owner, you should ensure that you are doing your books right. Proper bookkeeping provides the right amount of tax deduction.
Small business owners may not be updating books on more minor expenses like a hi-tea after a board meeting and going in a personal vehicle for an official appointment. Instead, receipts of each activity performed for business or business development should be recorded and entered in the books as an expense. It will help you set your costs in the right place for the deduction.
Tip 2: Be Proactive With Retirement Planning And Tax Planning
Retirement plan contribution is one of the best tools for tax planning for small businesses. You can receive a valuable tax benefit if you include a small business retirement plan in the tax season. Usually, small business owners don’t keep the retirement plan contribution at the top in the tax season; instead, they contribute after the tax year has ended. In this way, you lose an excellent tax shield available to you.
Tip 3: Track Vehicle Mileage and Auto Expense
As a small business owner, if you are using your vehicle for business purposes, the business accounts allow you to charge those expenses to the business. The costs include lease payment, interest on the loan taken for the car, parking tickets, maintenance, and repair.
Suppose the vehicle is not used solely for business. In that case, you can charge only a portion of the expense to the company’s account. For example, a milage count could highlight when the vehicle is used for business.
Tip 4: Take A Home Office Deduction
Suppose you are using a portion of your home exclusively as an office, where you meet your clients, customers, or patients regularly for business purposes. And part of your home is the primary place of my business. Therefore, keeping a record of expenses and a check and distinction of the site used for business is vital for sizable deductions of home-based building expenses in the accounts.
Tip 5: Charge Marketing Expense
Marketing your business is vital to success. However, as a small business owner, you must
be aware that you can claim a tax deduction on each cent you use for marketing your business. It may be in internet marketing, SEO, or traditional marketing campaigns.
Tip 6: Include Legal And Professional Services
As a small business owner, you need to hire some professionals and delegate the responsibilities. So you can use the legal and professional services charges to the business accounts and hence receive the tax shield. For example, you may charge business consultancy, financial consultancy, bookkeeping, attorney, and HR services.
The net cost of the services will be lower when the bookkeeper deducts these expenditures from the business income.
Tip 7: Charge Business Related Insurance Premium
Getting your business insurance is essential for many reasons. Business requires malpractice insurance, liability, business location, and property insurance. The insurance premiums are deducted separately and can be used to take a tax shield.