Are Taxes Getting You Down? Here’s How To Cut Your Bills

Taxes are a grim reality of doing modern business. The moment you start turning a profit, you have to pay for them. But even if you don’t make any money, there are still costs associated with filing with the IRS. Thinking about it takes up your mental resources. And, on top of that, you also have to pay accountants to create statements and balance sheets. It all soon adds up.

The good news, though, is that tax doesn’t have to be taxing. There are ways that small businesses like yours can cut the expenses involved with accounting and reduce the overall burden of taxation on the enterprise.

So what do you need to do?

Shelter Your Income Through A Retirement Plan

Taking profits out of your business directly will lead to extensive tax charges. You’ll have to pay the full rate, especially if you take out the money in the form of income.

If, however, you put money into a sheltered retirement account, you can avoid paying tax entirely in the year. Instead, you only pay when you come to withdraw after the retirement age.

Interestingly, this means that you can actually amplify the income that you eventually receive. If you’re 35 and leave money in your retirement account to grow with the market, you will have more money to withdraw when you hit 55. So while it is taxed at the same rate as regular income, you have more of it, lessening the eventual burden.

Stop Using Expensive Accounting Services

Accountants make a fortune by charging you high fees to do your accounts. Sure, they do a great job of filing your return and keeping you safe from the IRS, but they do a lot of their work by hand, which automatically pushes up the cost.

Today, though, most companies can do the bulk of their accounting work using software. These applications take a lot of the leg work out of the process, cutting costs and reducing accountancy bills.

With a TurboTax service code, you can actually cut the costs even more. Many companies can save up to fifty percent on their filing bills using a combination of discounts and computerized methods.

Defer Income

The tax authorities charge you for the money that you make in any given year. So if your income is $50,000 from April to April, then you’ll pay the full tax due on this amount. If you know that your income will fall next year, you can sometimes defer income to lower your tax bills. So, for instance, if you know you’re going to earn $50,000 this tax year but $30,000 next year, you may be able to defer $10,000, averaging your income over the two years. The effect of this will be to cut the overall tax that you owe.

Reducing your tax bill is possible, but it requires a bit of know-how and understanding of the tax code. Businesses have been benefiting from these methods for years. They could be just what you need to enable your enterprise to thrive.