You’ve started your own business and are now building a steady income from it. At the same time, you’re incurring business expenses that must be subtracted from your revenue to derive your net profit. This is a never-ending process, but it gets more burdensome if you factor in the taxes you must pay from your earnings. But don’t fret! You get to enjoy certain write-offs if you own a business. And if you want to keep as much of your revenue as possible, start implementing some of following tax tips.
Hire a Professional
No matter what you think you know about taxes, an accountant or CPA has a better knowledge of the tax laws and can help you save money. For example, accountants know how to calculate depreciation on office machines, furniture, buildings you own, and software you use. They also know how certain tax laws work toward your advantage and can get you higher deductions. Make sure you maintain and organize all receipts and revenue records from your business so you don’t spend hours organizing them when taxes are due. It also eases the burden on your accountant to expedite the tax filing process.
Pay Quarterly Taxes
Most businesses pay on a quarterly basis in April, June, September and January. This ensures that you don’t owe so much on April 15, which could result in a penalty. Calculate how much you need to withhold each quarter for federal, state and social security taxes, and start saving it in a separate business account.
Print Your Own Stubs
Automate the check stubs for you and your employees by using an online check stub maker. This can save you money from hiring another company to process your payroll. These online check stub makers will also automatically calculate all payments due employees once you input the federal, state, Medicare, and Social Security tax rates. The results are professional and quick, which will significantly cut the time you would ordinarily spend calculating taxes from a ledger. Click here to learn more about check stub makers.
Form an S Corporation
By filing as an S Corporation, you become an employee of your LLC or Limited Liability Corporation, according to Entrepreneur, and would pay the IRS every month. Your earnings are then calculated as payroll taxes and not part of your overall business earnings. This can result in significant tax savings that will increase your bottom line.
The old adage “It’s not what you earn, but what you save that counts” certainly applies to entrepreneurs. Start using some of these tax strategies and quit giving your hard-earned money away come tax time.