A successful tax planning strategy can effectively arrange your finances, so you pay as little tax as possible. It’s no secret, however, that tax planning can be difficult and more so if you have a small business. Make your taxes work for your business without getting in trouble with the law by following these useful strategies.
Know Your Proper Business Classification
Different business classifications have varying tax rates and liabilities, so you have to classify your business correctly. Common classifications include Partnership, Sole Proprietorship, C-Corporation, S-Corporation, and Limited Liability Corporation.
Know Your Tax Deductions
Knowing your deductions allows you to deduct your business expenses from your adjusted gross income (AGI). Tax planning experts in Salt Lake City, Utah recommends that your look into deductions applicable for business vehicles, travel expenses, entertainment expenses, and home offices.
Request for a Due Date Extension
Ask for a realistic extension on your due date, but know that not all requests can be approved. You could likewise delay the due date by doing some things in advance and doing others at a later date. You can delay selling assets and collecting payments until next year, and make equipment and real estate purchases sooner than you planned.
Consider Negotiating for Monthly Installments
If you’re having difficulties paying due taxes, try negotiating with the Internal Revenue Service (IRS) for monthly installments so you can pay off your overall tax amount in more affordable increments. The IRS has predetermined payment plans according to eligibility and need. Most often, these plans benefit small business owners, but you should be aware that your monthly payments would come with interest so work out the costs first.
Do Your Own Due Diligence and Hire a Professional
No one should take taxes lightly, especially business owners. Income, payroll, and sales tax should all be calculated accurately. There are costly fines, penalties, and interest for failing to file your taxes correctly and sound tax advice is a priceless commodity.
Keep in mind that tax planning is an ongoing process, so you must evaluate your monthly expenses and income regularly. These include meeting with your tax advisor or CPA to assess how you can benefit from the deductions, credits, and provisions available to you.