Maximize Profits with These Handy Tax Tips
Picture the scene. It’s spring. The birds are singing, the flowers are blooming, and after a long, cold, dark winter, the days are longer and the air is warmer. Spring is a great season on paper, yet for Los Angeles and other cities business owners, spring can be a stressful time of year. Why? Because spring signifies tax season.
If you’re looking to maximize profits in your small business, and indeed, to run your business legally and efficiently, it pays to get your taxes and accounts in order nice and early. Not only that, but it is also highly beneficial to hire an experienced tax professional and have them take care of your taxes and small business accounts for you.
The objective of any business is to make money, and while your Los Angeles business may indeed be making money, it’s important that you’re able to maximize profits and boost your net income, which is income after taxes.
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If you’re looking to boost your business earnings after tax, here are several handy tax tips to consider.Hire a Professional
The first tip we’re sharing with you today, is arguably the most obvious, but as it’s also the most important, we’re including it first.
If you really want to maximize profits and boost your business earnings after tax, the first thing you should do is hire a tax professional. Rather than filing your tax return yourself each year, go ahead and hire a professional tax service to file for you.
This is ideal because to begin with they do the majority of the work for you so you just sit back and pay them when they’re finished, plus they know all of the tricks of the trade.
Tax professionals will know what deductions your business is eligible for, they can offer advice to help cut back on spending, and they can help you claim for tax breaks and tax deductions such as business expenses.
Okay, you do of course have to pay for these services, but for people looking to maximize profits, the services pay for themselves very quickly, and then some.Employ Family Members
Family-run businesses are becoming more and more popular with each passing year, and in part, this could potentially be because employing family members will help to reduce your taxes.
The IRS allows for a selection of different options when it comes to hiring family members, all with the possible benefit of helping to shelter a percentage of your income from being taxed.
By hiring family members, business owners in Los Angeles and all over America, especially those classed as small business owners, are able to pay a reduced marginal rate, or in some cases, eliminate entirely, income taxes which they pay to their children.
Sole proprietorships for example, are exempt from paying Medicare taxes and social security taxes on the wages of their children.
This is of course all legal and above board, and is a great way of boosting net income.Begin a Retirement Plan
If you speak to a tax planning expert on ways in which to help maximize profits in the workplace, another recommendation they will give you is to begin a retirement plan.
By starting your own business, you do forfeit a 401k match if you were previously employed, but the good news is that there are a number of potential retirement account options for you to help maximize retirement savings and to help reap very important tax incentives, defined benefit plans, 401k and others.
As one example, with the ‘one Participant 401K plan’ the IRS allows for you to put away up to $57,000 in total retirement contributions, which are of course tax deductible.Deduct Travel Expenses
As a business owner, you are legally entitled to a number of tax breaks and incentives and can legally claim back a certain percentage of taxes in the form of business expenses deductions.
As a example, if you or your employees travel a great deal, you can claim back a percentage of your taxes from business travel expenses.
Business travel is completely tax deductible, though obviously, personal travel is not.
To really maximize business travel, experts recommend that you combine any personal travel journeys with justifiable business purposes. If for example, you have a business seminar out of town, you could take the family with you and in your downtime, enjoy a break with the family once the seminar is over.
What you can’t do however, is book an all-inclusive 1-week holiday to the Bahamas for you and the family, and then try to write it off as a business expense because you happened to answer a few work-related emails on your laptop before heading down to the beach.
Frequent flier miles earned via business journeys, though, can actually be legally redeemed for personal travel purposes at a later date.Maximize Business Expense Deductions
As we mentioned previously, as a Los Angeles business owner, you are legally entitled to a number of tax breaks and deductions in the form of business expenses.
If you’re looking to maximize profits, it pays to make use of these deductions and to fully understand them. Again, this is where it pays to hire an accountant of tax professional as they can tell you exactly what you can and cannot claim as a business expense.
We’ve already looked at travel, but in reality there are many other business expenses which you can claim against.
Say for example, your work laptop decides to stop working and you need to purchase a new one ASAP, you can buy a new laptop and put this through your tax return as a business expense because that is exactly what it is. You need the laptop for work, and you use it for work, therefore it is a business expense.
There are so many expenses which are tax deductible that business owners are simply not aware of. Again, the best advice we can give you here is to speak to an expert, have them go through your accounts, books, and tax return for you, and see what they can do to maximize profits by making use of tax breaks and business expenses.
Get a free evaluation by calling us today at 1-877-788-2937.