Are you looking for better ways to optimize your financial position through new planning methods? Perhaps you’re starting to notice how much your business loses to taxes each year. If so, we have the solutions you need.

Tax filing season is a hard realization for many businesses. Even so, you can lower your tax burden as long as you figure out the right way around it. But you might wonder, where do you start?

Here are three effective business tax planning strategies to help you get the most out of your profit.

1. Maximize Tax Deductions and Credits

You can still get tax advantages as a business owner. Some of those benefits include deductions through the qualified business income deduction or work-related tax credits.

The QBI deduction gives business owners a deduction of up to 20% of their business income share. Note that this still comes with specific guidelines and limitations, like thresholds and eligibility.

It can get quite confusing, so you might want some assistance from someone who has experience in tax planning for businesses. You can read more about accountants and similar roles here and learn how they can help you in business tax planning.

You can also leverage your credits as a taxes and business strategy through the following options:

  • Work Opportunity Tax Credit
  • Disabled Access Credit
  • Employer credits from health insurance premiums

2. Put Money Towards a Retirement Plan

A tax planning for a new business you want to note early on is funding a retirement plan. It provides tax benefits to businesses the same way it does for individuals.

There are certain amounts you can contribute to the retirement fund. For example, corporation owners can contribute up to 25% of their salary, while sole proprietors can put a maximum of 20% of their earnings towards it.

Besides lowering your tax burden, you get to build a safety net for when you decide to retire. And so this makes it one of the most beneficial tax planning strategies for businesses.

3. Accelerate or Defer Profit Accordingly

Some companies use a business strategy for taxes that involves claiming revenues early to include them in the count for the current tax. Many refer to this method as accelerating income.

Alternatively, you can also push back the revenue count into next year’s earnings to relieve you of possible taxes for the following year. This is what most call deferring profit.

Both methods can help you save more by adjusting the amount of tax you pay each year. They also focus on profit projections, so you might want to consider getting professional help if that’s beyond your expertise.

Reduce Tax Burden With These Business Tax Planning Strategies

You can save business earnings by lowering the amount you put towards tax using several business tax planning strategies. It includes using tax benefits, understanding profit projections, and starting a retirement fund.

Most of these methods generally reduce the amount of tax you pay and put more money into your pocket. But it also helps you maximize your earnings through valid methods!

You can learn more informative topics by checking the rest of our blog.