5 Ways to Cut Your IRS Business Tax Bill - Forum.web.com
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5 Ways to Cut Your IRS Business Tax Bill
saving moneyThe IRS offers strategies to help business owners reduce expenses and save money on their tax bills.

When you open the doors to a new small business, the countless startup costs and ongoing expenses you will incur can be mind-boggling. These hefty business expenses oftentimes turn off entrepreneurs from even moving forward with their innovative ventures. The good news is that the IRS offers strategies that allow business owners to reduce their financial burden and cut their business tax bills.

1. Adopt a formal legal entity structure for your business.

If you currently work as a sole proprietor, or you are part of a general partnership, the IRS is probably taking a big bite out of your income each year in taxes. Thankfully, there are strategies you can use to reduce your tax bill on business income. Consider establishing a formal legal entity structure for your business. This can lead to more flexibility as a business owner, liability protection, and a lower tax liability. You could turn your venture into an LLC, an S corporation, or a C corporation. Each of these structures comes with unique tax savings and other benefits, so explore which option is best for your business.

2. Explore all relevant business tax deductions.

As a business owner, you can write off a large array of business expenses as a deduction on your IRS income tax return. Because of this, it is critical to identify all potential business tax deductions that could reduce your tax bill, allowing you to put more money right back into your enterprise. Consider claiming the home office deduction for work you do from home, the vehicle deduction for business trips, the meals and entertainment deduction for business-related dining and activities, along with a host of other write-offs specific to certain industries. You might be a little surprised about what you can deduct – and how much money will remain in your business bank account instead of going to Uncle Sam.

3. Explore all relevant business tax credits.

IRS business tax credits are not as common as deductions, but they are certainly worth looking into for tax savings. For example, there are tax credits available for business owners who hire disabled workers or military veterans, use energy-efficient tools, or conduct certain trades that benefit the community and environment. Some of these tax credits, which often reduce an actual tax payment on a dollar-for-dollar basis, are quite beneficial to businesses. Some credits may be claimed just one time, but others can be claimed on a tax return every single year in some cases.

4. Be aware of your additional tax-filing deadlines.

As a business owner, don’t forget about your additional IRS tax-filing deadlines. If you fail to pay what you owe, you may wind up with unwanted late-filing and late-payment penalties. There are estimated taxes due each quarter throughout the year, corporate filing deadlines in March and April, payroll tax deadlines, and even an annual filing for nonprofits. Create a tax calendar on your smartphone to keep track of these extra due dates, along with the traditional April 15th deadline for personal tax returns.

5. Let a professional handle your business tax needs.

While most small business owners enjoy wearing multiple hats, one hat that is typically uncomfortable revolves around business taxes. This is why outsourcing your IRS business tax filings, bookkeeping, and payroll can literally save you both time and money. Accounting professionals who are experienced at preparing and filing business tax returns know exactly how to minimize their clients’ tax obligations each year. So consider letting an expert handle your tax returns because the cost of doing so will pay off for you through all of your eligible tax breaks that an accountant can claim on your behalf.

Brendan Pack
Brendon Pack is Vice President of Sales & Business Development at 1-800Accountant, the nation’s leading accounting firm for small business owners. Mr. Pack has developed an innovative line-up of products to assist business owners with their tax and accounting needs. He is dedicated to making accounting easy, accessible, and affordable for small-business owners everywhere.
Brendan Pack


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