Cutting down the financial expenses and yet retaining the quality at the topmost of the form is every entrepreneur’s fantasy. But only a few business eyes upon the most guaranteed area for saving the money, which is income tax.
In accordance with the research, the small running business in developed countries overpays their taxes because of the failure of business to claim proper deductions. In such cases, many of the business are still unaware of the errors and couldn’t figure out the legitimate deductions.
Well, the fact is- it’s all upon you to discover the legitimate deductions and tax strategies. However, tax strategies are positive and legitimate actions. The legal use of the laws of tax can help you reduce your income taxes.
While some strategies are obvious and straightforward, others are simply legal and easy to use, but less understood. Below we have compiled a list of tax-savvy strategies for the business owners to reduce their income taxes.
# Business expenses can be fully deductible
You are free to deduct any expenses that fall under the category of “Ordinary and necessary” to run the business, regardless of the fact if they benefit you personally. In addition to the “Ordinary and necessary” category, it is also held that the business expenses should also be “reasonable”.
# The Home office deduction
The home office no longer needs to be the “basic and principal place of business”. The taxpayer can now satisfy the home office test if he/she uses the home office for management and administration activities. This can qualify for the home office deduction.
# Deduct the mileage as miles
If you own a vehicle then you can use it for your business to travel to and from the office in order to deduct the costs of keeping it on road. So, if you use your vehicle for both the business and pleasure then only the business portion produces the tax deduction.
# Rent property to your business
As an entrepreneur, you also have the opportunity to compensate for the financial risk you own as well as the services provided to the business. Retain any real estate used in the business on your name. This avoids you from paying self-employment taxes and gives the company a deduction.
You can save a fortune in your tax, only if the tax planning year-round concern is prepared. However, mastering the laws of tax and expense deductions can be tricky but well worth it, and for which we have the prominent one-stop solutions for your accounting and financial reporting needs like Boston Financial and many tax outsourcing companies in India and across the world.
Though the implementation of the strategies seems simple and easy it is always advisable to consult tax professionals, or tax outsourcing companies for- proper planning, accounting, and documentation of complicated tax strategies and save thousands of dollars.