A Guide on Tax Planning for Businesses
Are you a new business owner? Starting to plan your business taxes now could save you trouble and strife later.
Whether you are a new business owner or are preparing for the end-of-year taxes, you will need to know what strategies will work best for you. Businesses that don’t plan for taxes become businesses that pay a higher percentage of profits to the local tax authorities. You should get into the habit of preparing your accounts each week or month and staying ahead of tax planning by consulting an expert. Meet your tax requirements without underpaying and file before the deadline to improve your overall financial position.
What Happens If You Don’t File Your Business Taxes?
In a business sense, not filing end-of-year taxes is a punishable offense. You should find that the local tax agencies apply a penalty for late filing and again for late or underpayments. If you want to avoid these charges, file your taxes on time and pay the full amount owed when they tell you to.
How to Plan Tax for Your Business?
Follow this advice to plan for taxation in our business. You should seek the help of a professional business tax lawyer to establish the best ways to pay less.
Choose a Business Structure That Pays Less
Your business’s structure has an impact on the tax payable. Therefore, you should think about taxes from the outset of business. Some types of structures, such as a sole proprietorship of an LLC are pass-through entities in the eyes of the tax collectors (USA). These entities are fiscally transparent, which helps the owners avoid paying taxes twice for both business and personal use. A small business with a single proprietor may find this information helpful when setting up a business.
Work Out Your Expenses
There are many expenses you can claim through your business. Write them all in your accounts from day one. Good examples of expenses could be:
- The use of your car for company purposes, both insurance and mileage
- Building rental
- Office rentals
- Your laptop or PC
- Admin equipment such as diaries and pens
- Any special PPE
- Any software or hardware devices that make your job easier
- Anything which helps you boost production
- Advertising and marketing
- Any business meeting expenses
- Travel expenses
Developing a Tax Planning Strategy
There are many tax planning strategies that will be unique to your business. For example, if you run a vehicle fleet, you may maximize vehicle-related deductions. If you optimize your pass-through entity status, you can reduce costs. You can offer your employees benefits that grant you deductions or breaks, incorporate retirement planning, and even run at a net operating loss if you are an SME.
Your Business is Unique
Your tax planning strategy must fit your business. The only way to do this, unless you know the law, is to hire a specialist to talk you through it. A tax plan is an ideal way to shave costs off your yearly overheads. Do it correctly, and you could end up better off.