The thought of leaving any of your hard earned money on the table as a small business owner is enough to make you sick. Nobody wants to give the government more money than they have to. Sometimes, if you aren’t taking advantage of all the deductions that you qualify for, that is exactly what you are doing. Propel Your Accounting is here to talk about some of the deductions that small businesses might be forgetting to take advantage of that could help lower their tax bills.
Health Insurance
Having health insurance is one of the ways that small businesses can lower their tax bill. While health insurance is extremely expensive, there are some advantages that the IRS has in place for those that are self-employed and paying for their insurance. For those that qualify, you can claim all or at least a good portion of your insurance premiums on your taxes.
Put Something Away for Retirement
It can be hard to sacrifice some of your income today so that you can live well after you have retired. There are several avenues of retirement savings that can help you save money on your taxes. Whether you have a Solo 401K or are contributing to an IRA, these can all impact what you are paying in taxes. So, not only will you be saving for your future, but it will help you keep that money in your pocket as well.
Claiming a Qualified Business Income Deduction
If you are reporting your business income on your personal tax return, you could qualify for the qualified business income deduction or the Section 199A deduction. If you do qualify, it could mean that you can claim up to 20% of qualified business income on your taxes. Those that are eligible for this deduction include sole proprietorships, partnerships, LLCs, and S corporations.
Purchase a Company Vehicle
There are several benefits that come from owning and using a company vehicle. There are a couple ways you can use a vehicle to lower your tax bill:
– Standard Mileage Rate: The standard mileage rate is $.65 a mile. This means that you need to keep a log of all the miles that you drive for your business and work so that you can claim this on your taxes.
– Actual Expenses: If you would rather tally up your vehicle expenses including maintenance, fuel, oil, tires, registration fees, and any other expenses that are required to use a vehicle rather than the standard mileage rate, you can do so. Working with a tax planner to determine which one would benefit you the most is always a good idea.
Bookkeeping, Accounting, Business Consulting & HR / Admin Services in the United States of America
If you are looking for ways to lower your tax bill, you can turn to Propel Your Accounting to help ensure you’re taking advantage of all the deductions that you are eligible for. Call us today!
