As a small business owner, you’re always looking for ways to save money on your taxes, says Aron Govil.
Here are 10 tax strategies that can help you reduce your tax bill in 2022.
1. Invest in Your Business:
Aron Govil says one of the best ways to save money on your taxes is to invest in your business. You can deduct the cost of certain business expenses, including advertising, equipment purchases, and training courses. If you’re able to increase your profits, you can also qualify for additional tax breaks, such as the 20% deduction for qualified business income.
2. Claim Your Business Expenses:
Another way to reduce your tax bill is to claim all of the business expenses that are eligible for deduction. This includes things like office supplies, mileage, and internet service. You can also deduct the cost of meals and entertainment expenses that are related to your business.
3. Make Charitable Contributions:
Charitable contributions are a great way to reduce your taxable income. You can deduct donations of cash or goods, as well as the costs of volunteering your time.
4. Take Advantage of Tax Credits:
Tax credits can be more valuable than tax deductions because they provide a dollar-for-dollar reduction in your tax bill. There are a number of credits available for small businesses, including the credit for paying estimated taxes, the credit for hiring veterans, and the credit for energy-efficient improvements.
5. Invest in Your Employees:
One of the best ways to save money on your taxes is to invest in your employees. You can deduct the cost of employee training and education, as well as health insurance premiums and other benefits.
6. Deduct Your Business Use of Home:
If you use a portion of your home for business purposes, you can deduct the associated expenses. This includes things like mortgage interest, property taxes, and home office expenses.
7. Make Estimated Tax Payments:
Paying estimated taxes can help you avoid penalties and interest charges from the IRS. You’re generally required to make estimated tax payments if you expect to owe $1,000 or more in taxes for the year.
8. Defer Income:
If you’re able to defer some of your income until next year, you can reduce your tax bill for this year. You can do this by delaying the receipt of payments for services or products, or by selling assets at a lower price than you would normally charge.
9. Use Tax-Free Savings Accounts:
Tax-free savings accounts (TFSAs) are a great way to save money on your taxes. You can contribute up to $5,500 per year and the earnings are tax-free.
10. File an Amended Tax Return:
If you find that you’ve paid too much in taxes this year, you can file an amended return to get a refund. Be sure to file within three years of the original filing date or two years of the date the tax was paid, whichever is later.
By taking advantage of these tax strategies, you can reduce your tax bill for 2022. Talk to your accountant or tax advisor to determine which strategies are best for you.
Q: I’m a small business owner. What are some of the best ways to save money on my taxes?
A: There are a number of strategies that can help you save money on your taxes, including investing in your business, claiming business expenses, and making charitable contributions. You can also take advantage of tax credits and deductions, and defer income until next year. Talk to your accountant or tax advisor to determine which strategies are best for you.
Q: I’m self-employed. Do I still have to pay estimated taxes?
A: Yes, you may be required to pay estimated taxes if you expect to owe $1,000 or more in taxes for the year. You can use Form 1040-ES to calculate your estimated tax payments.
Q: I didn’t file a tax return for last year. What should I do?
A: You should file a tax return as soon as possible. The IRS may impose penalties and interest charges if you don’t file your return on time. You can use the Form 1040X to file an amended return.
Aron Govil says there are a number of ways that small business owners can save money on their taxes. By taking advantage of tax credits, deductions, and other strategies, you can reduce your tax bill for the year. Talk to your accountant or tax advisor to learn more about how to save money on your taxes.