Self-employment means being your own boss. However, running your own show also comes with some challenges. One of these is to deal with the tax burden. As a small business owner, you should always abide by the tax regulations to avoid any kind of future discrepancies. At the same time, you should properly gear up for the new tax season while focusing on saving money in taxes. There are some useful tax saving tips that self-employed people should use in order to reduce the tax bill and save every dollar you deserve. So, are you ready?
If you are, here are some of the most useful tax tips that you should follow to save as much money in taxes as possible.
As a self-employed individual, the very first rule you should practise is to keep your income and expenses records in order. In fact, you should follow this right from day one of the launch of your service.
Every receipt is important. So, track every single source of income as well as the things you spend money on in regard to your small business. The IRS wants every small business owner to keep their income records in an organized manner. When you have a proper record of your finances, it will become easy to qualify for specific deductions. This will help you save money in taxes.
If you are running your own small business, you may not be aware of all the deductions you can qualify for. Expenses is a broad term, and it does not just include the expenses for office equipment.
Business expenses include business travel, business entertainment and the space you use for running your self-employment venture. Even if you do not have a separate office space, you can get deductions for the room you use for business purposes in your house or apartment. Shipping costs, postage and dues all fall under the business expenses category. Just like you track every self-employment income, you should also maintain an excellent record of all the expenses that relate to operating your small business on a day-to-day basis.
Every piece of technology that you purchase to run or grow your small business may be deductible. Whether it is a desktop computer, laptop or tablet you have bought to run your business, keep track of the costs.
Maybe you didn’t purchase a new desktop computer or a laptop in the past year. But did you get a software upgrade? Did you buy a new piece of software to maximize the efficiency of your digital system? All these are expenses that can be written off as part of the cost of running the business. Whether it is hardware or software that you buy to grow your self-employment venture, it may all be deductible. Therefore, remember to include these deductions in your tax return.
When you plan to save on taxes, a good step is to employ your own family members and relatives. You can pay them a salary in the same way as you would to other people you employ to grow your business.
You can hire your wife or brother for help. Many self-employed individuals have adopted this practice to reduce tax liability. Just remember to not go overboard while hiring your own family members. To find out more about how much money you can pay them in salary and use this step to reduce taxes, feel free to reach out to one of our tax professionals at the SCL Tax Services.
Setting up a new small business is challenging. If you have started a new business as a self-employed individual, you should definitely know about the startup cost deduction to lower your tax bill and save money.
The IRS allows deductions for expenses incurred before your small business started operating. The tax deductions include:
As far as startup costs are concerned, the IRS has put the expenses into these three categories. Also, you should know that you will not qualify for these deductions if your self-employment venture does not take off. The IRS Publication 535 provides more details on these deductions.
Setting up a self-employed qualified retirement plan is a significant step towards saving on taxes. Whether you are a freelancer, an independent contractor or a small business owner, you should definitely plan for this.
Setting up a retirement plan kills two birds with one stone. First, you get to lower your tax bills and save money as a result. Second, the plan enables you to also save money for your post-retirement life. A Simplified Employee Pension IRA is a good example for such a retirement saving plan. For detailed information, feel free to get in touch with one of our professionals at the SCL Tax Services. Our tax professionals will help you set up the plan in a proper manner.
Whether it is filing tax returns in a hassle-free manner or saving money in taxes, it is always a good idea to turn to experts.
A tax professional or tax accountant stays up-to-date with all the tax laws and the latest changes in the rules. At the SCL Tax Services In & Near Bronx, NY, we have a small but highly competent team of tax experts to help you with all kinds of tax-related issues in regard to self employment and startup ventures.
If you are a self-employed individual or small business owner located in the Bronx, New York, you should head straight to the SCL Tax Services for income tax services, tax preparation and other tax help services. To schedule your consultation with one of our tax professionals, you can give our tax office a phone call or write us an email using the contact form below. We serve our dear clients in and near the Bronx, Eastchester, Mount Vernon, Westchester, and Yonkers, New York.
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