As a business owner, you already have many financial responsibilities. Adding on the burden of taxes can be overwhelming. To reduce any stress, you need to find ways to reduce what you’re spending on taxes.
Start a Retirement Plan
Having a retirement plan in place can reduce taxes for you and your employees as well as your business as a whole. For example, you can offer 401k plans for their retirement. Since this counts as a benefit for your employees, all expenses related to these 401k plans can actually be deducted from your taxes.
This includes matching contributions, management costs, and even paying a third-party consultant. You can save money on taxes via offering a retirement plan in many ways and it can even benefit you if you are the sole owner and worker in a business.
Use The Right Structure
There are four many types of business structures you can choose from when setting up your business and you can even change structures later on if you choose. If you want to save money on your taxes, then you need to make sure you choose the most advantageous structure. In a limited liability company (LLC), all members of the company are taxed as separate entities according to their tax brackets.
If you favor a pass-through taxation structure, you could also choose an S-corporation structure. An S-corp allows you to only pay FICA taxes on your salary. An S-corp offers many other tax benefits as well as advantages for when you transfer or end the company.
Save On Healthcare
Healthcare costs continue to rise and both you and your employees need ways to pay for any medical expenses. Offering a healthcare plan is one way to provide for this, but many businesses also offer an HSA (Health Savings Account). With an HSA, employees can save money in their account and this money will specifically be used for medical expenses. The benefit of an HSA is all contributions are made pre-tax and the account can grow and be withdrawn from tax-free. This gives you and your employees the money you need to cover medical expenses without needing to pay taxes on that money.
Finding ways to reduce money going toward taxes can significantly benefit your business. With fewer expenditures, you have higher revenue and more of an opportunity to expand your business. It’s worth finding ways to reduce your tax expenses.
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