I like to look on the bright side. Whenever my tax bill has gone up in the past, it’s been because I had made a lot more money. That’s a good thing.
If you’re worried about your small business tax bill increasing, take heart in the fact that there are plenty of ways to spend money and avoid taxation on that money. Some of the expenditures serve you now, some will make your business better down the road, and still others help your employees. Here are five ways take a bite out of your taxes come April.
1. Buy insurance.
Health insurance is expensive. If you don’t already provide quality health coverage to your employees, start. This one action alone will go a long way toward eating up that extra income. And your employees will love you for it.
2. Invest in a retirement plan.
There are many small business retirement plans including SEPs, SIMPLEs, and even 401k plans. Chances are if you’re like most Americans, you’re not saving as much for your future as you could. And if you’ve never considered contributing to employees’ retirement, you should. It’s a huge benefit that can attract high quality employees.
3. Grow the business.
Got extra cash? Buy things to help you expand. This year’s Economic Stimulus Act bumped Section 179 depreciation to $250,000. What that means is that you can purchase certain assets and then subtract them right off your bottom line instead of depreciating them over time.
If you’re adamantly opposed to paying higher taxes to support an expanded governmental role, what better way to avoid the tax and ‘spread your own wealth’ to the causes of your choice than to make a charitable contribution? In most cases you can give away half of your Adjusted Gross Income. That’ll take a chunk out of what you owe.
5. Complicate your life.
The more money you’re making, the more important it is to get good tax advice, and general business counsel for that matter. A good accountant will help you plan expenditures and structure businesses to your best advantage. For example, you may need to incorporate to take advantage of certain benefits, or to decrease your personal take home pay.
~I realize this sounds like an ad, but it’s true that good business advice is worth the expense.
Taxes are a cost of doing business. Stop worrying about paying more, and spend some money on expert advice so you’ll pay as little as possible.