Which of these can you do now?
When it comes to your small business, saving on taxes is an even greater victory when you strategically invest that money back into your business. Money saved has extra value when invested into your company, where small business tax savings can continue to grow.
Here are three ways to save tax money, and three ways to put it to work back in your small business (where it can go on to do BIG things):
Write off bad debts. Your small business can save on taxes by deducting debts from income. Your accountant can help you with this. Make a list of clients that you know are not likely to pay overdue invoices from the past year. Deductions can also include loans to employees, clients and vendors who have defaulted on those loans, and gone most of the year without making any payments.
Purchase vehicles or equipment for your small business. This sets you up for depreciation deductions later, which will earn you tax savings. Ideally, these items will improve your company’s overall productivity and efficiency, adding to their overall value.
Plan the timing of your small business expenses. Maybe there are certain expenses you can pre-pay at the end of the year to reduce your income. Discuss with your accountant if it makes sense to prepay or stock up on certain items now for tax purposes, if you know you’ll be using those items throughout the year anyway.
How to grow those savings in your small business:
Hire more people. If you hire people with varied experience,background and specialties, your company will benefit from new perspectives.
Develop additional streams of income. New revenue, aside from your core business model, could include a new product or service offering, subscriptions, or different pricing models for different customers.
Give bonuses. In these days of The Great Resignation, your star employees need recognition and appreciation for jobs well done. Hiring to replace them costs money – not to mention training to do their jobs – so it’s a wise investment to keep them happy and feeling valued.
These three ways to save on taxes and save within your small business - even if those savings or steps toward savings may seem small or incremental – will still make a positive difference.