How to Minimise Business Taxes

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Business Taxes

Perhaps the most dreaded of all expenses are business taxes. Whether they are payroll taxes or business profit taxes, business tax expenses really need to be managed to ensure that you are not paying more than you have to. One way to help minimize business tax expenses is to make sure that tax reports are filled out correctly and that they are filed on time. This strategy helps to reduce business tax expenses by reducing the chances that you will be fined for filing late or for making a mistake that leads to an overpayment or an underpayment. To ensure that all tax reports are filed on time and that they are correctly filled out, you will need to (1) make out a calendar of due dates of specific tax forms and reports, (2) have the instructions for filling out each tax form and report on hand in hard-copy, and (3) make sure that the employee(s) that is filling out the reports is trained in doing so or has access to help.

The second strategy that your company can take to ensure that you are not paying more business taxes then you have to is to make sure that you are claiming as many business expenses as are possible on your income tax return. To ensure this you will need to (1) know what things qualify as a business expense, (2) what form or line the business expense will need to be accounted for on, and (3) how to keep track of your business expenses.

The first step is to know what qualifies as a business expense. To learn what qualifies for a business expense and how much of the actual cost is tax deductible you will need to read through IRS publication 535 Business Expenses. This publication outlines everything you need to know about business expenses when you are filling out your annual income tax return. For example, if you operate your business out of your home you can deduct certain housing costs from your tax liability, however, you have to first figure out what percentage of your home is used for business and what percentage of your home is used for personal use. Publication 535 goes over: deducting business expenses, employees’ pay, retirement plans, rent expenses, interest, taxes, insurance, costs that you can deduct or capitalize, amortization, depletion, business bad debts, electric and clean-fuel vehicle deductions, miscellaneous business expenses, and how to get help. It is important to familiarize yourself with this publication to make sure that you are claiming every expense that you can including depreciation expenses, bad debt expenses, and business loss due to disasters or theft. This publication also tells you where each type of business expenses will need to be accounted for and what forms you will need to fill out.

Finally, you need to know how to keep track of your business expenses to support your claims that you have occurred them in relation to your business operation and that you simply did not make them up in order to defraud the IRS. To keep track of your expenses you should have a filing system for all of your receipts and invoices for supplies; a separate folder for employment tax expenses including a photocopy of the reports, forms, checks, and payment coupons that you submitted to the IRS and state department of income tax; receipts for use of petty cash; and signed employee expense forms that detail what expenses you reimbursed your employees for. Try to keep your receipts organized so if you are audited, you will be able to quickly retrieve the receipts that you need to prove your deductions were valid.


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