1. Be Aware of Tax Credits and Deductions Available to You
Many businesses can save substantially on taxes by taking advantage of the credits and deductions available only to them. Typical business-related tax credits include a credit for hiring a qualified disabled veteran, a credit for employer expenses in providing child care, and a credit for purchasing energy-efficient equipment. Other deductions include the cost of supplies, materials and other costs incurred during your business operations.
2. Buy Capital Equipment With Cash
Another way to save on business taxes is to pay cash for equipment purchases. There are many depreciating types of equipment that businesses can buy to reduce taxable income. The most commonly used one is a computer. When you pay cash for a computer or any other equipment used in your business operations, you can deduct it from your profits when filing taxes.
3. Make Charity Donations
If you’re active in charity work, then you can reduce your taxable income by making a number of donations throughout the year. You can claim donations as a deduction on your 1040 tax return. Remember, it’s one of those deductions that the IRS will not question.
4. Put More on Retirement Contributions
You should maximize your retirement contributions to reduce taxable income on your return. You can add up to $17,000 to a 401k or other plans throughout the year and lower your taxable income accordingly. In addition, you can also lower taxes by making IRA contributions.
5. Help Employees With Student Loans
If you have employees who have trouble paying off their student loans, then why not help them out? You can deduct the amount you pay on their behalf as a business expense. They will thank you for it later when they finish college and gain employment with higher salaries.