Did you know that three in ten small business owners believe that they are overpaying in tax? If you belong to this group, you should look into hiring a Louisiana tax resolution specialist and asking them to analyze your tax return. They might be able to help you improve your strategy and therefore save a significant amount of money.
Because tax law is complex, it’s highly likely that you’re not making the most of all your allowances and deductions. Together with your specialist, you can go over each aspect of your business and figure out where you can do better. In addition to the obvious solutions, such as always filing on time and deducting your expenses, your tax expert can explain some more complex strategies, such as hiring a family member.
How Can You Reduce Your Business Tax Liability?
Experts use various strategies to reduce a business’s tax liability. It’s always best to start with the basics, which include filing your return on time and paying by the due date to eliminate penalties, deducting all your expenses, and using your personal allowances. Additionally, you can optimize the use of your company’s pension scheme and hire family members.
Always Stay on Top of Things
Millions of American individuals and businesses have tax debt. Not filing or paying your taxes on time is one of the worst things you can do because there are various penalties associated with late payment. Not only will you have to pay interest on the outstanding amount, but you might also have to pay up to 25% more. For businesses with a significant tax burden, this can add up to tens of thousands of dollars.
To avoid paying extra, you should contact a good tax specialist well before the deadline. That way, the professional has enough time to compile all your documents and submit your return. Remember, if there’s no time pressure, your tax specialist will be able to analyze your account more carefully and figure out how to reduce your taxes, for example by making deductions or putting more of your money in a retirement account.
Build Up Your Retirement Fund
In the US, there are several retirement accounts that can shelter your money from taxes. As an individual, you can put more than $50,000 in retirement accounts every year, and the money can grow tax-free until you need it. If you run your business for many decades, this can add up to a significant sum. What’s more, you can use your employees’ retirement accounts to further reduce your business taxes.
For example, you can require everyone to pay 2% of their salary into a retirement fund, or you can offer a 3% employer match. Because there are various accounts and options, you should speak to a professional before setting up a plan for your business.
Maximize Your Deductions
You can deduct the bulk of your business expenses from your taxes. This includes all your travel expenses, office supplies and materials, electronic gadgets, rent, utilities, marketing expenses, employee pay and benefits, gifts, and charitable contributions. Some kinds of entertainment expenses, for example a business dinner where work-related matters were discussed, are also 50% deductible.
If you believe you’re not deducting everything you could, you should speak to your Louisiana tax resolution specialist. They can explain the various categories to you and give you examples. Then, you might need to purchase business software that can help you keep track. Good software might only cost you $20-50 per month, and it can save you thousands because it keeps track of all your deductible expenses.
Save for Your Healthcare Needs
No matter how healthy you are now, it’s likely that you or someone in your family will need medical care in the next decade. Money saved in an HSA (Health Savings Account) is sheltered from taxes, and it can be used for various healthcare needs, including dental and vision. Families can put over $7,000 in their HSA every year, and the money is never taxed as long as it is taken out only to pay for their healthcare needs.
What’s more, money in an HSA can be invested, and any gains you make are also not taxed. Therefore, this account offers a triple benefit, and it’s a great way for you to reduce your taxable income every year. If you haven’t used up all the money in your HSA by age 65, you can withdraw it tax-free for any purpose, not just your healthcare needs.
Employ a Family Member
One of the less well-known strategies for reducing your tax burden is to employ a family member to work in your business. There are several options for people who would like to involve their families.
For example, income paid to children or spouses won’t have to be taxed as heavily as regular income, and social security and Medicare taxes can be eliminated. However, you have to make sure that your family member is hired for justifiable business purposes, so you can’t hire someone for a role they are not qualified for or pay them significantly more money than another employee would receive.
What If I’ve Made a Tax Mistake?
Some tax problems can be fixed, even after the return has been submitted. If you’ve noticed that you made a mistake in one of your previous tax returns, you should contact a specialist who can confirm that you are correct. Returns can be amended for up to three years, so you might still receive a refund if you’ve failed to list some of your deductions, and you might not have to pay a penalty if you’ve failed to declare all your income.
In some cases, you can even carry forward some of your tax-free retirement allowances. However, this isn’t always the case, and you should speak to your tax expert to find out whether you have any unused allowances. If you have penalties on your account because you filed or paid your taxes late, you can ask the IRS to remove them under certain circumstances, for example if you were very unwell or a family member passed away.
Finding a High-Quality Louisiana Tax Resolution Specialist
Business owners who want to improve their tax strategy should work with experienced specialists who know both the federal and the state tax laws. While a general accountant might be able to show you what deductions to make and file your return for you, an expert can provide you with a much more comprehensive service.
Here at Geaux, we can analyze your strategy and help you make the most of your finances. Our team leader, Bryon, used to work for the IRS, so he knows about all the relevant strategies, and he’ll make sure you remain compliant. The best way to get started is to call or email us and ask us for a meeting, during which we can analyze your situation and let you know how to best improve it.
Optimizing your tax strategy is a great way of reducing your business expenses and increasing your company’s profitability. Some of the most important actions you can take include making sure you never file or pay late, deducting all your expenses, and using your pension and HSA allowances. Contact us at Geaux Tax Resolution to find out more about our services or to book your initial consultation.