As a small business owner, you’re always looking for ways to save money and reduce your expenses. When it comes to taxes, there are a number of strategies you can use to minimize your tax liability. Here are 10 of the most effective ways to reduce your small business tax liabilities.
1. Employ Family Members
If you have family members who work in your business, you may be able to take advantage of certain tax breaks. For example, you may be able to claim childcare credit if you have children under the age of 13. You can also take dependent care credit for certain elderly family members.
2. Hire Veterans
Veterans can qualify for many different tax breaks, including the Work Opportunity Tax Credit (WOTC). To take advantage of this credit, you must hire a veteran who meets certain criteria, such as being unemployed for at least four weeks.
3. Use Tax-advantaged Accounts
There are a number of tax-advantaged accounts that can help you save money on taxes. For example, you can open a Health Savings Account (HSA) to pay for qualified medical expenses. You can also open a Flexible Spending Account (FSA) to set aside money for child care, medical expenses, and other qualified expenses.
4. Invest in Energy-efficient Equipment
If you purchase energy-efficient equipment for your business, you may be eligible for a federal tax credit. The amount of the credit depends on the type of equipment you purchase and the energy savings it provides. Also, you would be investing in sustainable equipment which would depreciate slower and have a longer lifespan.
Under Section 179 of the tax code, you can deduct the cost of certain business equipment and property. This deduction is particularly beneficial for small businesses, as it allows you to deduct the cost of equipment in the year it is purchased, rather than depreciating it over time.
5. Build a Retirement Fund
Contributing to a retirement fund is a great way to reduce your taxes. You can deduct up to $53,000 from your taxable income if you contribute to a 401(k) plan. If you’re self-employed, you can deduct contributions to a SEP IRA.
6. Focus on Healthcare
Healthcare expenses are one of the largest deduction categories for small businesses. If you offer health insurance to your employees, you may be able to deduct up to 100% of the premiums from your taxes.
7. Get Incorporated
Incorporating your business can provide significant tax advantages. C corporations are taxed at a lower rate than sole proprietorships and partnerships. In addition, shareholders of C corporations can exclude up to $75,000 of dividends from their taxable income.
8. Maximize Deductions
There are many deductions available to small businesses, so make sure you take advantage of as many as possible. Common deductions include office supplies, travel expenses, and vehicle expenses . Many small businesses are eligible for special deductions, such as the home office deduction and the self-employment tax deduction. Be sure to take advantage of all the deductions that apply to your business so that you can minimize your tax liability.
If your business has a net operating loss (NOL), you can carry the loss back two years or forward 20 years to offset income in those years. This can provide significant tax savings. Consider getting help from an expert to stay on top of all the deductions.
9. Charitable Contributions
Contributing to charity is a great way to reduce your taxes while also helping out causes that are important to you. You can deduct charitable contributions from your taxable income up to 50% of your adjusted gross income.
10. Stay Current on Tax Law
The tax code is constantly changing, so you must stay up-to-date on the latest tax law changes. This will ensure that you’re taking advantage of all the deductions and credits that apply to your business. You can stay current on tax law changes by reading tax publications and subscribing to newsletters from reputable tax sources.
Reducing your small business tax liability doesn’t have to be difficult—there are several strategies you can use to minimize your taxes. By taking advantage of deduction opportunities, utilizing tax-saving strategies, and staying current on tax law changes, you can ensure that your business pays its fair share but no more. If you need any help, our team of small business tax experts can assist you. Give us a call today.
Year after year, taxpayers fork over a chunk of their hard-earned income to the government in the form of taxes. And while it’s true that we all have to pay our fair share, there’s no reason why we can’t do some tax planning to ensure we’re not paying more than we have to. After all, every dollar counts!
One of the simplest—and most effective—ways to reduce your tax liability is by reducing your overall income. This can be accomplished in a number of ways, such as working fewer hours, scaling back on overtime, or taking a pay cut. Of course, this isn’t always possible or practical, but it’s worth exploring if you’re looking for ways to lower your tax bill.
Stay Within the Tax Brackets
The first step in effective tax planning is to understand the tax brackets. The federal income tax system is progressive, which means that taxpayers are taxed at different rates based on their income level. The higher your income, the higher your tax rate will be.
There are currently seven federal income tax brackets, with rates ranging from 10% to 37%. So, if you can keep your income within a certain bracket, you can minimize your tax liability. For example, let’s say you’re a single filer with an annual income of $50,000. That puts you in the 22% tax bracket. But if you can find ways to reduce your income to $40,000, you’ll drop down to the 12% bracket. That can save you a significant amount of money come tax time.
Increase Your Number of Tax Deductions Throughout the Year
Another way to reduce your tax liability is by increasing your number of deductions. This means taking advantage of any and all deductions you’re eligible for, such as those for home office expenses, charitable donations, and medical expenses. The more deductions you have, the lower your taxable income will be—and the less you’ll owe come tax time.
This includes both above-the-line deductions, which can be taken regardless of whether you itemize your deductions, and itemized deductions, which can only be taken if you itemize.
Take Advantage of Certain Tax Credits
In addition to deductions, there are also a number of tax credits available that can help lower your taxes. Some of the more common credits include the earned income credit, the child tax credit, and the American Opportunity Tax Credit (AOTC). Be sure to explore all the credits you may be eligible for so you can take full advantage of them come tax time.
The third tax planning strategy is to invest in tax-advantaged accounts. These are accounts that offer special tax benefits, such as the ability to grow your money tax-free or deduct your contributions from your taxable income.
There are a few different types of tax-advantaged accounts, including traditional IRAs, Roth IRAs, and 401(k)s. Each has its own set of rules and benefits, so it’s important to do your research to find the best option for you. But investing in one of these accounts can help you save on your taxes in the long run.
Tax planning is an important part of financial planning. By understanding the tax brackets and taking advantage of deductions and tax-advantaged accounts, you can save yourself a lot of money come tax time. As an accountant, it’s your job to help your clients do just that.
To Recap,
By following these three simple strategies—reducing your overall income, increasing your number of deductions, and taking advantage of certain tax credits—you can minimize your tax liability and keep more of your hard-earned money in your pocket come tax time. So why not put them into practice today? Your future self will thank you!
This article is for informational purposes only and does not constitute tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how tax laws apply to your situation and your personal finances.
As a new small business owner, you may not have in-house HR. Our previous posts covered what an HR consultant does and why, how, and when to hire one. We did the research on what you should expect to pay, so you don’t have to.
This blog will discuss what to pay an HR consultant, broken down into several factors influencing the price, including types of services, location, frequency of assistance, expertise, and trust. We’ll also walk you through how to spot what you want and how to negotiate the price you deserve to pay.
Compared to other types of Consultants
Tax consultants charge around $200 per hour. Web designers charge around $30 to $80 per hour, with $75 being the average. So, overall we see business consultants have an hourly cost range of about $30 to $200 per hour. HR consultants charge between $95 to $190 per hour, with $140 being the average.
Compared to the Type of Services within HR
Not all HR consultants do the same things. Some do everything, while others specialize in one thing, for example, writing employee handbooks. Specialized services can range from requiring assistance with recruiting and hiring efforts or strategic integration of HR programs, processes, policies, or practices.
Compared to other Locations
HR consultants often factor in how their rates compare to local and regional practices. It is important to consider their location’s cost of living and the overhead costs of their company. Where they are might also mean they are more connected to other HR professionals, banks, businesses, etc. The highest paying states are Nevada, DC, Delaware, Alaska, Washington, New York, VIrginia, and Rhode Island. Some states have more jobs available than others and some states have a higher concentration of worthy candidates than others (i.e. less concentrated means less competition).
Remote work has eliminated must of our comparisons of location and also overhead costs. The most important thing to consider is regional employment law. Ideally, look for someone from a strict state like California or New York. Or – even better – look for someone in your businesses’ state. This includes where you are incorporated AND where your employees live AND where you have facilities AND where your headquarters is located. So, even if you’re incorporated in Delaware, you will want your HR person to be knowledgeable about California if you have employees who live in California.
Frequency of Use
Hourly consultants may request a minimum number of hours (ranging from about 2-5). Some consultants may have a daily or half-day rate/fee. For the aforementioned options, the consultant may request out-of-pocket expenses, like travel and lodging or site visits. These charges and their reimbursement are often more subject to negotiation than the basic rate/fee, so don’t be shy to ask questions.
A project rate or fee to handle longer-term assignments such as writing an employee handbook or developing a performance management and appraisal process. The consultant may establish a list of deliverables or milestones for a long-term project and bill the client when a milestone has been reached instead of waiting to be paid when the project is completed. These terms are usually outlined in the written contract describing deliverables and pay arrangements, including the ability of the client or consultant to alter the terms of the contract if necessary. A retainer is an upfront fee the client pays to reserve a specific date or contract. Retainers may also be used in conjunction with any of the above pay arrangements (SHRM, 2000).
Based on Experience
Experience and track record will need to be taken into account. A brand-new consultant may charge closer to $50 or $75 per hour. With 20 years of experience, they may charge $150 or even $200 per hour. When you are hiring, be sure to hone in on this one. Make sure the relevant experience is there. You may even ask for references or look for reviews on the internet.
Trust
Hiring an HR consultant is a great way to handle your employment relations matter. They are professionals on this topic, and you can trust them to do their work well. Still, it is extremely important to interview them several times to know that you can trust their consistency. Consider referrals from friends who are also small business owners or at the very least, consider reviews. They could be a tremendous help for many things like hiring new employees, planning and executing training, and performance management.
Companies such as Startup Tandem offer outsourced HR solutions for startups and small businesses in various industries all over the country. Learn more about Startup Tandem and the Tandem Culture and give them a call for a free quote on services.
E-commerce has been a game-changer for businesses large and small. It’s created entirely new industries and upended traditional ones. It’s also had a profound effect on the field of accounting. In this post, we’ll explore how e-commerce has changed accounting and what that means for businesses today.
Data-Driven, Global, Complex
The biggest way that e-commerce has affected accounting is by making it more data-driven. In the past, accountants would have to estimate things like the cost of goods sold or advertising expenses. But now, with e-commerce platforms like Shopify, companies can track this data down to the penny. This has made accounting more accurate and allowed businesses to get a clearer picture of their finances.
E-commerce has changed accounting by making it more global. With businesses selling products and services all over the world, they need to be able to track their finances in multiple currencies. This can be a challenge, but there are now accounting software programs that can handle this for businesses. This has made it easier for businesses to expand their reach and sell to customers in any country.
Another way that e-commerce has affected accounting is by making it more complex. With traditional brick-and-mortar businesses, there are only a few streams of revenue to keep track of. But with e-commerce businesses, there are often dozens (if not more) of different ways that customers can pay for products or services.
This can make it tricky to track finances and ensure that all revenue is accounted for. With businesses selling online, they need to be able to track things like taxes, shipping costs, and return rates. This can be a challenge, but there are now accounting software programs that can help businesses keep track of all this data. Software such as QuickBooks, Xero, and FreshBooks has made it easier for businesses to track their finances and make sure they are compliant with tax laws.
How you should respond to this change?
E-commerce has changed the accounting landscape, but that doesn’t mean businesses should be afraid of it. In fact, embracing e-commerce can help businesses become more efficient and save money in the long run. Here are a few ways to do that:
1. Use accounting software: As we mentioned before, there are now accounting software programs that can make it easier to track your finances and stay compliant with tax laws. QuickBooks, Xero, and FreshBooks are all great options.
2. Hire an accountant: If you’re not comfortable handling your finances yourself, then consider hiring an accountant. They can help you keep track of your finances and make sure you’re compliant with tax laws.
3. Stay organized: One of the most important things you can do is to stay organized. Keep track of your income and expenses, and make sure you have all the documentation you need. This will make it easier to file your taxes and keep track of your finances.
4. Stay up to date: E-commerce is always changing, and new technologies are being developed all the time. Make sure you stay up to date on the latest changes so you can be compliant with tax laws and keep track of your finances.
5. Seek professional help: If you’re ever feeling overwhelmed by your finances, don’t hesitate to seek professional help. An accountant or financial advisor can help you get your finances in order and make sure you’re on the right track.
Overall,
E-commerce has had a positive effect on accounting. It’s made it more accurate and allowed businesses to get a better understanding of their finances. However, it has also made it more complex, so businesses need to be prepared for that when they make the switch to selling online.
E-commerce made the field of accounting more data-driven and complex, but also more accurate and transparent. For businesses, this means that they need to be extra diligent about tracking their finances and keeping good accounting records. But overall, the benefits of e-commerce far outweigh the challenges—especially when it comes to accounting!
If you found this blog, you know how important it is to get your books right and your E-commerce Accounting done right. There’s no denying that e-commerce is on the rise. In fact, By 2020, GroupM predicts that the total will have reached $7 trillion, or 25% of retail sales, and will reach $10 trillion worldwide by 2027. With such a large and rapidly growing industry, it’s no wonder that more and more businesses are turning to online platforms to sell their products and services.
But as any e-commerce entrepreneur knows, running an online business is not without its challenges. One of the biggest challenges is keeping track of your finances. After all, accounting is not exactly the most exciting part of running a business. But it’s a necessary evil if you want to keep your business afloat.
That’s where an accounting service for e-commerce comes in. A good e-commerce accounting service will help you keep track of your finances, budget appropriately, and make sound financial decisions for your business.
The Benefits
If you’re running an e-commerce business, or are thinking about starting one, here are a few reasons why you need to consider an accounting service:
1. E-commerce businesses have unique accounting needs.
2. An accounting service can save you time and money.
3. A good accounting service will help you make sound financial decisions for your business.
4. An accounting service can take the stress out of managing your finances.
5. A good accounting service will give you peace of mind.
If you’re running an e-commerce business, or are thinking about starting one, an accounting service is a must. A good accounting service will save you time and money, help you make sound financial decisions, and take the stress out of managing your finances.
Why is bookkeeping important in e-commerce?
If finances are the pulse of your e-commerce business, inventory is the lifeblood. Simply put, no product = no revenue. You’ll know when you can afford to move and how quickly you can afford to hire based on precise bookkeeping- this way it’s easy to understand when stocking up is necessary. However, some markets are demanding so it’s important to learn the best accounting practices for online businesses before getting started in order to keep everything flowing smoothly.
When should I get an accountant for my business?
At what point should I get an accountant? Accounting should be a part of your business from the start. However, you may postpone hiring a full-time accountant until your company expands. Many small business owners or their CFOs handle accounting in the early phases of their enterprises. As businesses grow, they eventually need to outsource their accounting function. The decision on when to do so depends on various factors, including the stage of your business growth, your accounting needs, and the level of expertise you require.
Outsourcing accounting may make sense if:
Outsourcing accounting may make sense if:
Startups often have key limitations such as:
– Scarce resources
– Inexperience in specialized areas like accounting and finance
– Concentrating only on the main business goals
and so forth. These factors usually result in poor financial reporting.
Outsourcing your accounting function can provide many benefits, including improved financial reporting, access to expert-level support, and freeing up time to focus on your core business activities. If you’re a startup or small business owner, you may want to consider outsourcing your accounting needs.
What are the benefits of outsourcing accounting?
There are many benefits of outsourcing accounting, including improved financial reporting, access to expert-level support, and freeing up time to focus on your core business activities.
Some of the key benefits of outsourcing accounting include:
-Improved financial reporting: Outsourcing your accounting function can improve the quality and accuracy of your financial reports. Financial reporting is critical to running a successful business, and outsourced accounting services can provide the expert-level support you need to ensure your reports are accurate and up-to-date.
-Access to expert-level support: When you outsource your accounting function, you’ll have access to a team of experienced professionals who can provide the expert-level support you need to manage your finances effectively. This can be especially helpful if you’re not familiar with accounting or if you don’t have the internal resources to handle a complex accounting function.
How do I find a good e-commerce accountant?
The most important thing to consider when choosing an accountant is whether or not they have experience with e-commerce businesses. Be sure to ask about their experience and if they have any case studies or examples of previous clients they’ve helped. Also, ask about their fees and what services they include in their packages.
The bottom line is that e-commerce accounting is important and you should bring in accountants. It may seem like a daunting task, but with the right help, it can be a breeze. Contact us today to learn more about our accounting services for e-commerce businesses. We’re here to help you grow and succeed.
The Benefits