Guest article provided by: incitetax.com
If you’re sick of being stuck paying a lot in taxes and are looking for some strategies to keep more money, then review these top 5 strategies for huge tax savings and take action right now.
Paying attention to these in your situation will not only make you a lot of money right now, but it will also grow your bank account perpetually, remove the worry of just getting by with your finances and allow you to do more of the things you like.
1 Business Structure
This is one of the most important aspects to help you protect your business AND save a lot of cash by not overpaying the IRS with their sticky hands. There are various business structure options, some better than others for owners. We tend to stay away from “always” or “never”, so in our experience usually an S-Corporation is the best entity for a business owner to protect your income and minimize tax obligations.
There’s a reason your business structure is listed first. Choosing the right entity is a big deal and should be considered thoughtfully. The correct business entity for your situation can save you thousands, not only on your business taxes, but personally as well.
2 Deductions = Friends
When you’re spending $1 ask yourself if it is in anyway related to your business. Chances are there are quite a few expenses tied to your business. Those small deductions add up quickly and will only add to your tax savings. Deduct expenses you’re already making and start using your business for those purchases.
It’s important to note here, you need to have a separate business bank account and use that account for all your business purchases. In some states, it doesn’t matter if you accidentally paid for a business expense with your personal account. Those can’t be deducted, at all. So let’s just avoid sending any red flags to the IRS and open a separate account and use it for ALL your business expenses.
3 Keep Records
We know this sucks and can be quite tedious when you do get yourself to do it. Mostly because your tasks have added up from putting it off too long. But without detailed and up to date records you will forget about deductions and end up paying more in taxes. And as we’ve established, you won’t get it back from the IRS. If you happened to get audited, you will likely pay even MORE in taxes because the auditor will say certain things are mistakes and you have no way to prove otherwise because the records are not good enough. Not a fun situation to say the least.
At minimum do your accounting once a month on a spreadsheet. For a better option that has been effective for owners to do is to do it twice a month using a software program. The key is to do it regularly throughout the year to make tax time less stressful. You have enough to worry about. An added benefit of keeping up on your records is you are looking at your finances more regularly and can catch issues before they do more damage. See how the savings add up!
Bonus tip – keep your receipts. Hopefully you don’t need them, but if you do, you’ll be glad you have the proof you need.
4 Travel More
Deduct personal travel. Yes, you really can. The huge caveat, though, is you have to have a PREDETERMINED plan to conduct business or have some type of business activities, then the trip can be deductible. Even with the entertaining activities on the side. Make sure you plan ahead of time and set some business meetings or activities around your personal plans and you are good to go.
Just to be clear the actual entertainment expenses cannot be deducted. If you are traveling with your family, only the portion of business-related expenses if you were to travel alone are deductible. That still adds up – travel there and back, meals, lodging, even dry cleaning when you get back! More huge tax savings!
5 Rent Like A Boss
Rent your house out to your business and hold regular meetings. You can deduct the rent expense from your business, but you don’t have to report the rent payments you receive to you personally. How much? Average is around $15,000 annually that comes to you in rents that you won’t pay tax on. We call this strategy Corporate Rent. It is one of the most underutilized, yet most beneficial savings strategy to business’ big and small.
Most of these strategies don’t require extra work on your part. Set yourself up right and your huge tax savings will keep coming, year after year.
Schedule a free planning session to discuss specific ways you can start saving money now and increase your cash.
Follow us on …