Tax Planning Strategies for Small Businesses

As a small business owner in Boulder, if you have ever had to pay a large tax bill, you may have questioned how to reduce or eliminate it from happening again, legally. Tax planning for small business should happen more than just once a year. In fact, when done correctly, it is an ongoing process that changes as laws, and your business, also evolve.

Start with Knowing Your Numbers

Review your income and expenses every month to stay on top of your budget and be aware of changes in your financial situation that could affect your tax liability. Meet with your Boulder CPA professional on a quarterly basis to review these changes.

Plan with Knowledge: Use Your Resources

Tax evasion is a crime of purposeful deceit to avoid taxes. Tax planning, however, is a legal method of awareness of and utilizations of tax credits, deductions and laws. Your CPA is a valuable resource in tax planning for small businesses in Boulder. By understanding ever changing tax laws and provisions, they can guide you in the best ways to spend and save.

There Are Several Tax Planning Strategies to Employ

Tax planning for small business include strategies for the owner’s personal tax as well as those for the business itself. Some options include:

  • Avoiding costly mistakes such as incurring penalties and missing allowable deductions
  • Lowering the individual’s tax rate
  • Lowering the individual’s taxable income
  • Managing tax credits and excess tax hits
  • Changing your filing status
  • Adding family to the payroll
  • Contributing to a retirement plan
  • Making charitable contributions
  • Purchasing equipment

Watch and Adjust Your Tax Planning Solution

Many tax planning strategies use estimations for future income levels. A great plan can become a bad one if major changes happen in your business. Some plans can reduce taxes in one area while increasing them in another, so regular “check-points” are suggested to stay on track.

Avoid an Audit by Utilizing Professional Tax Planning for Small Business

Audits can be triggered when the IRS notices behavior that seems unusual. Your CPA understands what’s expected for deductions within your industry, as well as what is able to be maximized for:

  • Depreciation
  • Meals and Entertainment Deductions
  • Automotive Deductions
  • Travel Deductions
  • Home Office Deductions

It is important to note that this article doesn’t constitute advice, as only a thorough review of your specific and unique situation by a qualified professional should be considered valid. Tax planning for small business is an important task to optimize your bottom line income, while also following tax laws.

Find a Boulder CPA firm with high ethics, quality customer service, and professionalism who can best suit your small business needs. Partner with a firm knowledgeable and capable enough to grow with your developing business. Scher Group is a Boulder CPA firm specializing in small business accounting and tax services. Contact Scher Group today at 303.443.9001 to learn more.

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