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Small Business and Taxes

When a person owns a small business they may think that they will have to pay a lot of money in taxes. While a small business does have to pay their fair share, there are some ways that they can save. A small business can get take breaks on everything from their supplies to their company SUV.


Deduct Startup Costs


A small business can deduct their start costs. The company can even deduct these expenses before they make their first sale. Some of the items they can deduct include computers, equipment, rent for their office, and related things. A business can deduct $5,000 for their first year in business. If the organization costs including legal fees and other related costs total over $50,000 then the business can deduct another $5,000. When deducting these costs a business needs to keep all of their receipts just in case the IRS wants proof of the expenses.


Medical Reimbursement Plan


If a person has a spouse that works for the company they can claim them as an employee of the business and deduct some medical expenses. This can be deducted through the Medical Expense Reimbursement Plan. This will take care of medical bills that were not covered by the insurance plan such as co-pays. If a person has their children working for them as employees they can deduct their medical expenses as well.


Select the Proper Business Structure


When developing a business it is important to select the correct structure to get the most money back on taxes. Some small businesses select to file as a C Corporation. They are paying double the amount of taxes that they should be paying. They are taxed twice.


When looking to start a business take the time and look at the different options. The S Corp is good for small businesses. A person will be able to pay their business profits through their tax making it more friendly when it comes to paying their shape.


Paying Late


One of the worst things that a small business can do is pay their taxes late. There is a penalty from the IRS for taxes that are not paid on time. It can be 0.5 percent to 1 percent each month that the bill is late. This is automatically calculated by the IRS. If a person continues to make payroll tax deposits they are going to be hit with an even higher penalty. A small business always needs to pay their tax bills on time. If they cannot pay the full amount they should contact the IRS and develop a payment plan. There may be a fee for this service but it is less than the tax penalty.


These are some things that a small business can do to save money on taxes. A small business needs to keep track of their finances and they will be able to stay on top of their tax liabilities. This will help the business make money and keep them up to date on their tax obligations.


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2019-10-08 05:03:46, views: 103, Comments: 0
   
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