Running a business successfully is not merely about making profits and retaining your customers. It is also about cutting down expenses and saving as much as possible. But you need to think beyond lowering your operational costs. Consider being a tax-conscious business owner so that you can cut down your bills, stay compliant, and prevent IRS penalties. But it is easier said than done because small mistakes can land you in big trouble. Intentional ones are even worse. However, you need not do much to be a tax-savvy entrepreneur. Here are some tips that can help you achieve the goal.
Maintain good records
Before thinking about taxes and deadlines, you must commit to maintaining good records. You cannot expect to file accurately and on time unless you have proper accounting records at hand. Not every business can afford an in-house team of experts, so it makes sense to outsource expertise to stay on track. It is a small price to save your business from missing deadlines or making filing errors.
Time your income and expenses
You can save on the current year's taxes by timing the income receipts and expense payments in the current year. A profitable status in the current year means you may fall into a higher tax bracket. But you can decrease the revenue by deferring current bills at year-end and carrying them in the next year. You can also increase your deductions by buying equipment, stocking up on office supplies, or pre-paying your rent, mortgage, and insurance in the current year.
Make the most of your deductions
Deductions can lower your taxable income as you can deduct them from your gross income. But business owners tend to miss out on them and inflate their bills down the line. Experts at Del Real Tax accounting realize this concern and provide their clients with a checklist of commonly overlooked deductions. So make sure you do not miss out on any deduction, whether business loan interest, home office expenses, bad debts, or obsolete equipment.
Buy energy-efficient assets
You can go the extra mile with tax savings by buying energy-efficient business property, equipment, and vehicles. Eco-friendly assets entitle you to credits from state and federal governments. They make a smart choice beyond deductions and credits as you can reduce your carbon footprint. Not to mention, you also get to cut down your energy bills significantly with these energy-efficient investments.
Leverage donations
Another tip that makes you a tax-savvy business owner is to donate to a cause. Donations enhance the reputation of your business in the long run, but there is more they do. They enable you to save tax as authorities extend support towards charitable services by encouraging donors. But make sure that you donate only to registered charities that are open to deductions.
Being tax-savvy gives your business an advantage in more than one way. You need not do a lot to save up on your IRS bills. Just follow these tips, ensure the accuracy of your returns, and stay ahead of deadlines. You will never have to worry about big bills, IRS troubles, and penalties again.