Over 5 million businesses call the United States home. If you are the owner of a business, you know how challenging and rewarding this job can be. One of the main things you have to do to keep your business successful is to adequately manage your finances.
This finance management process includes things like keeping up with payroll, finding ways to cut costs and saving money on your taxes. Figuring out how to save money on taxes is harder than most entrepreneurs realize.
Rather than giving too much of your hard-earned money to the Internal Revenue Service (IRS), you need to find ways to maximize your deductions. The following are some things you need to consider when trying to save money on taxes.
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Be Sure to Deduct Vehicle Expenses
Developing a strategy to save money on your taxes will require both organization and time. The type of deductions you can use on your income taxes will directly relate to the type of business you have. For instance, if you use delivery vehicles, you can use them as a very valuable tax deduction.
There are two ways you can deduct the cost of operating commercial vehicles. The most popular method is by using the standard deduction mileage rate, which was around 59 cents per mile last year. Some business owners choose to itemize vehicle expenses, which is more complicated.
Itemizing these expenses will require you to track things like personal miles traveled on a vehicle, gas recipes and service charges. Consulting with a knowledgeable accountant is crucial when trying to figure out how to save on taxes as it relates to your commercial vehicles.
Tracking Your Business Phone Costs
Staying connected is something most business owners view as a priority. In an attempt to stay connected to both employees and customers, many business owners issue company phones to their team members. If you have monthly business phone expenses, you need to find ways to deduct them on your taxes.
The only way you can deduct these expenses is if they are solely for business use. This means that the phones you use for your personal life are not deductible.
Instead of making mistakes regarding what you can deduct, you need to leave this job to professionals. An accountant will have no problem doing your taxes correctly and maximizing the number of deductions you can claim.
You May Be Able to Deduct Bad Debts
DO you have a number of debts associated with the running of your business? If so, you may be able to deduct these debts on your taxes.
For instance, if you have a number of customer debts that haven’t been paid, they can be deducted. However, you will have to use the accrual method for your business to justify these deductions.
Learning How to Save Money on Taxes is Complicated
As you can see, learning how to save money on taxes is not easy. Taking on this job without the help of an experienced accountant is a bad idea. With this professional help, you can maximize your tax deductions without raising red flags with the IRS.
Are you looking for more information on managing small business finances? If so, check out the rest of our blogs.