Small business tax tips are extremely help to owners as they can literally sink or swim on their taxes. Taxes paid on income earned all year can amount to as much as 25% or more on your profit margins. It literally pays to be smart when it comes to filing taxes as it puts more of your own money back in your account and helps you look profitable on paper.
1. Collect Smart
Know your tax bracket before the year is out. You may find ways to “aim lower” that are perfectly legitimate. For example, wait until January to send out bills, thus delaying the collection of the income until next year. This simple trick could put you in a lower tax bracket and save you big. You will need to claim this as income for the following year. But the tax tip can be very valuable if you collect even a few large payouts from one or two clients each quarter or twice a year. Schedule all collections with your taxes in mind.
2. Purchase Smart
The same goes for major purchases that can be deducted from your small business income. Move purchases from January of next year to December of this year. You can buy items such as any kind of office supplies and other equipment in order to claim them as a tax-write off for this year. Stock up on items such as reams of printer paper, pens, pads, toiletries, cleaning supplies, and anything else your business may need now or in the near future. The end of the year is also an ideal time to find great sales on these items.
3. Go Green
Your small business can also get tax credits for the purchase of energy efficient appliances. The IRS will endorse your purchases by giving credit to businesses that buy green appliances. Items such as laptops, computers, printers, and even water heaters for your home office can qualify. Installing energy equipment for your business can garner you a credit up to 30% of your total cost. These credits were set to expire but have been extended to many purchases made before December 31, 2020.
A few pieces of qualifying equipment include:
- Qualified solar electric appliances.
- Solar water heating units.
- Small wind energy.
- Qualified fuel cells.
- Tax credits for home builders on new and existing homes who meet certain criteria.
- Tax deductions for up to $1.80 per square foot for commercial businesses.
- Visit the Energy Star program to learn more about the above or ask your bookkeeper.
You will need to fill out IRS Form 5695 to qualify for appliances for your home.
Small Business Tax Tips for Houston
Does your small business need help with its taxes as well as keeping the books? Feel free to contact us if you need help doing so.