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So how does one ensure their business is inline with the tax law? When in doubt, connect with a professional. It can also be beneficial to get acquainted with the tax deadlines and work their expenses in their favor and lessen their tax bill and maximize their return. The more money you make, the more taxes you file. It is an unwritten rule that every business owner is aware of.
As much as we all love our business to grow tremendously, not everyone loves paying taxes. The thought of taxes causes a cringe in most people and some may even try to evade taxes however this can only last for a certain period of time until the IRS catches up with you.
When is the next 2021 tax deadline?
As a business owner it's vital that you are keen about the incoming tax deadlines so as to avoid being fined because you were not knowledgeable.
The IRS states that the deadline for tax returns is April 18th 2022. Be sure to check the specifics of your state. Paying your taxes on time will not only let the IRS off your back but offer support to your community as the government should channel that money in various sectors.
5 Ways to reduce your tax bill
Now that you have agreed to pay your taxes, how do you make sure you are not doing so at the expense of your business’s survival? Daniela Ngounou shared these ways to lessen your tax bill with us in episode 90 of The Money Exchange Podcast. Take a listen here. Some of the 5 tips below we got from our conversation with Daniela.
1. Utilize your side hustle to claim business deductions.
As a freelancer or self-employed individual you are eligible for tax deductions. Your projects can easily help decrease your taxes. This can be complied by keeping track of your business expenses like advertising, website fees, home internet charges, memberships, office supplies and any expense of your business projects. Keeping track of those expenses with proper recording and this will make your tax filing at the end of the year easy.
2. Declare your home office as an expense.
If you are self -employed or run a side hustle, don’t let this home office expense slide. You qualify for it because the space you use is exclusively for business purposes.
In case you have an extra room in your apartment or living space, you can deduct a portion of your rent or utility fees as part of your office expenses.
3. Include Your Business Travel Expenses Write Off Business Travel Expenses.
Even While on Vacation If your business presents you with the opportunity to travel, be sure to include your travel costs like the airfare, food expenses, and hotel.
Other ways include:
4. Include your charitable donations
Some charitable contributions can be included while filing your taxes. Most times, these are overlooked yet they can be claimed on your taxes.
5. Take note of State and Local Tax Breaks
Check with your local and state taxing authorities to see what deductions might be available to you. Taxes differ from state to state and if you are fully aware of them, you can limit your income taxes. For example, in New Jersey, taxpayers can deduct the cost of medical expenses exceeding 2% of their adjusted gross income.
It is possible to find the right tax reduction strategies to ensure your money is working for you in the most efficient way possible.
As your business grows, seek the right financial advice to make certain of its continuity and you can get it and more at one of the resources below.
Freshbooks for all invoicing and billing here. Freshbooks makes small business invoicing and billing so simple, you’ll be amazed.
Tax Free living course for entrepreneurs here. This course has a free preview and a robust yet easy to follow course curriculum.
Honeybook for one place to keep all of your business affairs here. I love it. I used it for all client information, conversations, meeting dates, reminder to follow up and both my assistant and I have access to it.
Write something about yourself. No need to be fancy, just an overview.