All new and existing business organizations carry various legal commitments and responsibilities. One of those major responsibilities is Corporate Taxes, which all businesses are subjected to pay as they register as a limited company. Corporate tax may seem a very daunting idea for new and existing business owners because there are a multitude of potential taxes that need to be paid regularly such as income tax, employment taxes, federal taxes, and state taxes to name a few. This is why it is a good idea to seek the services of a reputable and skilled accountant to constantly help you manage your taxes. It is also recommended to follow these 8 tips that will certainly aid new and existing businesses to substantially save on corporate taxes.
Tip 1 – Travel is Tax-Deductible
As most organizations have affiliations in multiple states and countries, travel is a tax deductible item that you can write-off when paying your monthly taxes. Travel includes many items that you can write off such as:
In addition travel also covers travelling to meet with a customer and even includes travelling from one workplace to another. It does not, however, include the travel from an employees’ home to the workplace.
Tip 2 – Utilizing Subsistence
Many business organizations are not aware that all meals purchased by employees during a business trip are tax-free. What are not deductible are employee meals during lunch breaks on regular workdays.
Tip 3 – Accommodations are Tax Deductible
If your organizations conducts business across states or overseas and representatives have to stay long durations in specific cities, the money spent for their accommodations can also be written off as tax deductibles. Accommodations include the cost of the hotel room or apartment as well as any and all meals paid for during this period.
Tip 4 – Home-based Office tax Deductions
As there are also many small businesses that operate from their founder’s home, the home-based tax deduction allow items from the designated workplace to be written off as tax deductibles. These include items such as office utilities, phone/fax lines, and computers among others. The home office tax deduction is a tad bit tricky to manage as home owners must prove their expenditures by providing evidence in the form of invoices and receipts that prove the utilities were utilized for business.
Tip 5 – Business Records Tax Deduction
Good business record keeping is a fundamental practice that your business’ tax preparer must constantly achieve for your organizations to save more money on corporate taxes. It is extremely essential to record any and all business transactions such as:
Additionally, all book-keeping must be organized and kept safe at all times. This will come in handy in the event that your business is investigated by the authorities as your business will be able to procure any necessary document requested. The consequences of not having any proof to protect your business can result in higher tax liabilities, penalties, and fines.
Tip 6 – Employ Family Members
In any business, it is always a good thing to have family members working to build the business. Employing family members promote the idea that income is able to stay within the business. Employing family is also very useful for saving on taxes as their salaries can be deducted as a business expense.
Tip 7 – Mobile Phones are Tax Deductibles
As communications is a vital tool in maintaining relationships with customers, suppliers, and affiliates, it is highly advisable to have all company mobile phone and device contracts named under your business. This will enable you to claim all mobile and device bills as tax deductibles.
Tip 8 – Transfer Cash Savings Off-Site
For sole traders who have cash savings, it is recommended to move your cash to an off-site account that is tax free. Depending on the state, there are limits to how much cash savings a business can have. To avoid any difficulties, move your cash savings immediately.
Corporate taxes are indeed very complicated and tricky to manage. This is why it is extremely helpful to find a tax preparer with knowledge and experience so that you can learn more on how to save more money for your business.
