6 Ways Small Businesses Can Save Money On Taxes

Mar 18, 2021 | Taxes

dress shop owner writing in an open book

As tax time approaches, many small business owners are looking to maximize their deductions. To help you avoid overpaying on your taxes this year, 4Corner Business Services’ tax experts put together a list of 6 of the most common ways small businesses can save money on taxes.

Keep in mind that because no two businesses are the same, some tips on this list may not be appropriate for your company. 

1. Deduct Qualified Business Income 

When The Tax Cuts and Jobs Act (TCJA) went into effect in 2018, it allowed some businesses to deduct 20% from qualifying business income. The rules of this deduction depend on the structure of your business, your taxable income, and whether you’re married or filing a joint return, so be sure to talk to a tax specialist to determine your eligibility. 

2. Leverage Tax Credits 

The government provides tax credits when businesses do things (or don’t do things) that benefit the greater good. For example, when you commit to going green, hire employees, provide access to disabled employees, or provide health care coverage, you can claim tax credits.  

3. Set Up & Fund A Retirement Plan 

Creating and funding a retirement plan for you and/or your employees can help small businesses save on taxes. Your retirement plan must be recognized by the IRS to take advantage of tax savings. Popular IRS-qualified plans include 401(k) or 403(b), but with the number of retirement options available, it’s a good idea to double-check with a financial professional to find one that works best with your company’s goals. 

4. Change Your Business Structure 

Your business’ structure plays an essential role in your taxes. Not only does the structure dictate your taxable responsibility (such as the percentage you’ll pay into Social Security or Medicare taxes), but it also determines your ability to deduct business-related expenses. Make sure your business structure is serving you and your employees by meeting with a tax planner. 

5. Use Carryovers 

The IRS allows you to apply an unused portion of a tax deduction to a future years’ tax return. Small businesses typically use carryovers when there’s an expense that exceeds the yearly limit for a tax deduction. Carryovers are highly dependent on the tax credit or deduction in question and your business’ activity in the previous year, so be sure to check with an accountant before counting on a carryover. 

6. Hire A Tax Planner 

In addition to using a tax preparation expert, invest in a tax planner. 4Corner’s tax planners become an extension of your team and provide insight and contribute to your tax-saving strategy all year long. This can help you shape your business for financial success – before, during, and after tax season.

Read More: Biden Tax Changes And The Impact On Your Taxes

Every business is unique, and some items on this list may not benefit your small business. At 4Corner, our tax planning and preparation teams dive into your business’ current financial status and future goals to offer highly individualized guidance. To learn more about how 4Corner can help your business succeed, contact us today to set up a free consultation. 

Choose 4 Corner as a Trusted Tax Partner

By staying up-to-date on changing employee and tax laws, 4Corner’s business tax solutions can save you time, money, and a lot of stress.

Biden Tax Changes and The Impact on Your Taxes

When any new president starts their term, most business owners ask themselves the same question: “Will my taxes change?” Biden tax changes include a proposed series of tax reforms that, over the next 10 years, would raise taxes on corporations and individuals earning...

Benefits Of Using An Accountant To Do Your Business’ Taxes

Tax season can be a stressful time for anyone, let alone when you own a business. The stakes are high and you can’t afford to have errors. From dealing with 1099s to looking for ways to maximize your deductions, it can be overwhelming. That’s where a business...

6 Ways Small Businesses Can Save Money On Taxes

As tax time approaches, many small business owners are looking to maximize their deductions. To help you avoid overpaying on your taxes this year, 4Corner Business Services’ tax experts put together a list of 6 of the most common ways small businesses can save money...

Does Your Business Have a Tax Saving Strategy?

April 15, 2021. Tax Day. It may seem far away, but now is the time to develop a tax planning strategy. Tax planning is an important step for businesses and offers several benefits including saving you money. Getting Started with a Tax Planning Strategy Before we delve...

Should I Hire a Tax Consultant for my Business?

If you’ve filed your personal taxes, you may think it’s equally simple to file your business taxes yourself. However, filing your personal taxes and filing your business taxes are two separate conversations because business tax season lasts throughout the year. For...

Get More Out Of Your Accounting Software

Accounting software isn’t one-size-fits-all. If you’re not an accountant yourself, it can be difficult to choose the right accounting software and use it to its full potential. That’s why 4Corner offers expert business services and consulting. By partnering with a...

Why Small Businesses Should Hire A Bookkeeper

Keeping up with payroll, expenses, profits, and taxes is a full-time job. As a small business owner, you already have enough to keep up with - why not take your business’ day-to-day financial needs off of to your to-do list? A professional bookkeeper can help you keep...

5 Common Payroll Mistakes And How To Avoid Them

Payroll is much more than simply paying your employees. The process is complex and subject to ever-changing state, federal, and local laws. When payroll isn’t handled by an expert, it’s easy to fall prey to some common mistakes that have costly consequences. To help...

Denver Launches COVID-19 Business Relief Program

Denver Launches COVID-19 Business Relief Program Denver Launches COVID-19 Business Relief Program Denver announced the details of its business relief program, including $7,500 grants, on Wednesday. The Denver Economic Development & Opportunity (DEDO), in...

Families First Coronavirus Response Act

Familes First Coronavirus Response Act   Families First Coronavirus Response Act   On March 18 Congress passed and the President signed, the new “Families First Coronavirus Response Act”. One element of the Act requires all employers, of any size, to post...