Nobody likes doing their taxes, but for small business owners, taxes can be especially complicated and stressful. However, by understanding the tax code and following some helpful tips, you can reduce your tax liability and keep more money to put back into your business. Here are some tax tips that you can use to maximize your deductions and minimize your taxes.
Keep accurate records
Reduce your tax liability by keeping accurate and detailed records of all your business expenses including receipts, invoices, bank statements, and any other business-related financial documents. By keeping detailed records, you can claim all the deductions you’re entitled to and provide documentation to support those deductions if the IRS ever audits you.
Separate personal and business expenses
It’s important to keep your personal and business expenses separate to avoid any confusion or mistakes at tax time. Create separate bank accounts for your business and personal expenses and open a business-only credit card.
Stay informed on tax laws
Tax laws are constantly changing, and it’s important to stay up to date on any new laws or regulations that may impact you. This can help you avoid any surprises at tax time and ensure that you are taking advantage of all the deductions and credits available to you. To help you with this, you may want to…
Consider hiring a professional
Hiring a tax professional, such as a certified public accountant, can help you navigate the tax code, keep you up to date on changing laws, and ensure that you are taking advantage of any deductions you qualify for. A professional can also help you avoid mistakes, reduce your chances of being audited, and make tax time less stressful.
Take advantage of deductions
There are many types of deductions small business owners can claim but be sure to check with a professional to see which ones apply to your specific business. Some common deductions include:
- Home office deduction: If you work from home, you may be able to deduct a portion of your home expenses, such as rent, mortgage interest, utilities, and insurance.
- Meals & entertainment: You may be able to deduct a portion of the cost of meals and entertainment that are directly related to your business.
- Business travel: You can often deduct travel expenses that are necessary for your business, such as airfare, lodging, and meals when attending a conference, trade show or client meeting.
- Retirement contributions: Contributions to a qualified retirement plan, such as a 401(k) or IRA, are typically deductible.
- Business insurance: You can also deduct the cost of insurance premiums for your business, such as liability insurance and property insurance.
Plan ahead
Plan ahead by forecasting your income and expenses for the year, so you can make strategic decisions to minimize your tax bill. For example, you may want to delay income until the following year or accelerate expenses to take advantage of deductions in the current year.
Pay estimated taxes
As a small business owner, you may want to pay estimated taxes throughout the year – making proactive payments based on your estimated income. By paying estimated taxes, you can avoid penalties and interest charges for underpayment of taxes. Talk to your tax advisor.
Valley can help
At Valley, we’re dedicated to helping small businesses succeed by providing you with the financial services, tools, and resources you need – at tax time and throughout the year. Check out our SBA Lending page, visit our website or contact us to learn more.
Valley National Bank is an FDIC Insured, regional bank. Banking products and services are provided through Valley National Bank and insurance products and services are provided by Valley Insurance Services, Inc. (“VIS”). VIS is an insurance agency and a subsidiary of Valley National Bank. Valley National Bank and VIS do not provide tax, legal or accounting advice. You should consult your personal tax, legal and accounting advisors for advice before engaging in any transaction. All loans products are subject to credit approval. Additional terms and conditions apply. © 2023 Valley National Bank. Member FDIC. Equal Opportunity Lender. All Rights Reserved.
