Don’t Let Your Tax Burden Break Your Business

Businessman in a tax paperwork pile

Businessman in a tax paperwork pileNaturally, small businesses are interested in hanging on to most of the revenue they earn. Instead of evading taxes, there are legal ways to lower the tax burden and avoid running afoul of the law.

When you’re pinching pennies to get your business off the ground, the idea of paying taxes might seem unsettling. Instead of using all the revenue generated to grow your business, the government wants a cut. You should know that nothing good ever comes from trying to stiff the government.

Fortunately, taking tax-saving measures for business owners in Utah can help you lower the amount you owe. With proper planning, you can enjoy a considerable chunk of your business revenue without running into trouble.

Keep Excellent Records

You need to track and account for every penny that you shell out for business-related expenses. Favorably, most financial companies will send you a detailed history detailing your bank transactions. Accounting software also helps you track the daily running expenses, especially cash transactions.

An accounting system makes reconciling your business accounts quick. It means that when you won’t have to saddle your CPA with a cabinet full of old receipts. It also means that they get to handle your affairs efficiently without any error. Missing receipts can cause a considerable amount of headaches when accounts don’t balance out. Your accounting firms are likely to charge you extra for the additional work.

Pay Yourself First

Coins in a jar labeled as retirementAs a small business owner, you have many retirement options. You can combine the $5,500 Traditional IRA with other retirement plans such as SEP IRA or 401(k) and push your contributions up to $55,000 a year. You grow your retirement account by a factor of ten as a self-employed individual. If you’re over 50, you can increase that limit to $150,000 by adding a Cash Balance Pension Plan to your 401(k).

Any contribution that you make to your retirement accounts are tax-deductible. Consulting your financial planner can help you pick the best plan for your business. In addition to giving you a tax break, such moves let you secure your retirement.

Hire Family Members

Now, to be on the safe side, you should only hire someone, especially a family member, for a role that corresponds to their skills and abilities. You don’t want them undoing all your hard work and effort. You can even hire your kids to help with the paperwork or bookkeeping. Not only for the tax benefits but also for an opportunity to learn more about the business.

Hiring a spouse lets you double your contribution to your savings accounts. In the case of your teenage kids, they fall in a lower tax bracket, which reduces your family’s overall tax burden. Having your teen open a Roth IRA with the money they make can go a long way in securing their retirement as the account comes with excellent yearly returns.

It is only natural that you wish to lower the amount of money you pay in the form of taxes. There are many credible ways to reduce your tax burden without resorting to dubious means that can land you in legal trouble. Retaining the help of a reliable tax expert helps you pick the most effective methods to lower your tax obligations.