Running a small business takes a lot of effort. You work hard for your money, and it can be frustrating to see how much of that income goes toward taxes. Learning how to reduce taxes for your small business can help you retain some of that money to invest in more advanced equipment, put more money towards better advertisement, or pay your employees more.
Do Business in a Low-Tax State
One of the greatest things about doing business in America is that you can choose which states to do business in. Each state has unique tax percentages for things like mortgages, sales, and businesses. States with the lowest taxes for businesses include Wyoming, Alaska, and Florida. If you don’t think you could do a lot of business in these or other states with low business taxes, consider moving your headquarters to one of those states but still doing out-of-state sales to reach your target audience(s). Online sales have steadily increased over the past years, so you will not have a problem doing business online.
Understand Different Business Entities
As an entrepreneur, you have many freedoms. One of these includes the freedom to choose how to classify your business. Research the different classifications your business could fall under and what the different benefits of each are. For example, with an LLC, you get to choose how you are taxed. If you classify your business as an LLC, you can have much greater control in reducing your taxes.
Account for Home or Small Office Deductions
Most small businesses are run from home or a small office space. You can make tax deductions for office space needs such as electric bills, internet services, printer services, or better functioning computers or other technology if you need those things in order to run your business. A lot goes into creating and maintaining a successful small business, so it is important to keep track of these expenses with receipts and bills in order to make these deductions on your taxes.
Getting charged high taxes for your small business can be very overwhelming. However, with a little research and knowledge about small business taxes, you can greatly reduce your taxes without making major changes to your business. Learning about small businesses taxes will not only help you become more knowledgeable about the laws pertaining to your business, but help you allocate your financial resources elsewhere to keep growing your business.
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