Minimizing expenses is essential for any company, but especially for small businesses that are often
operating on a shoestring budget. And yet, many business owners accept taxes as an inevitability, and
make few efforts to minimize these annual expenses. While taxes certainly can’t be avoided, there is
actually a great deal that business owners can do to reduce their tax liability and positively affect their
businesses’ finances year after year. A meeting with an experienced tax consultant in Provo can provide
your business with numerous benefits and set you on the road to effectively managing your business
taxes.
SELECTING THE RIGHT BUSINESS DESIGNATION
While selecting your business’s corporate structure isn’t determined by taxes alone, it’s important to
understand how your business designation impacts your business tax liability. Whether you’re just
establishing your company or considering a change in your corporate structure, we recommend that you
meet with a tax advisor before doing so. We can advise you on how each option available to you will
impact your taxes.
For example, business owners registering as a corporation establish their companies as a separate entity
from all partners and shareholders. This means that the business is taxed separately, and is able to claim
its own deductions and credits. When the company’s profits are passed on to partners and
shareholders, those individuals will also be taxed on their business income. This means that income
earned by corporations is often taxed twice—once when it’s received by the corporation, and again
when the income is passed on to the individuals with an interest in the company.
Understanding the way in which different business structures are taxed can help you not only select the
right business designation for your company, but provide you with essential guidance as you prepare
your tax return each year.
MAKING THE MOST OF DEDUCTIONS AND CREDITS
Expenses are as inevitable to a business as taxes are; but those expenses can be leveraged to reduce
your tax liability through business deductions. It’s important for businesses to carefully examine their
tax situation each year and search for applicable deductions and credits that can reduce your company’s
taxable income. While not all business expenses are fully deductible, a tax consultant can advise you on
which expenses can be deducted and to what degree, while also helping you to find any deductions you
may have missed.
By comparison, tax credits are a dollar-for-dollar reduction of your tax bill, rather than a reduction of
your taxable income. These are provided by the government based on certain eligibility requirements,
and there are dozens of various credits available. Understanding what you qualify for and ensuring you
file for them correctly on your tax return isn’t always as easy as it seems. You’re more likely to find those
tax credits you qualify for, and less likely to make costly mistakes, if you have the support of a business
tax expert.
MAKING IMPORTANT DECISIONS ABOUT YOUR FINANCES
Knowing what deductions and credits you qualify for is just the beginning. It’s also important to properly
time business purchases in order to maximize the benefit you receive and minimize your tax liability.
For example, if your business’s income has placed you just over the threshold of a new tax bracket, it may
be wise to purchase new or additional equipment for your company. Properly timing these end-of-year
expenses—and ensuring you’re making purchases that are deductible, of course—can make a major
difference in the amount your company pays in taxes each year.
If you want to ensure that you’re managing your company’s taxes as effectively as possible, contact The
Accounting Guys to schedule a meeting with a tax consultant in Provo. We’ll review your business’s
taxes and provide you with insight into how we can help you better manage your taxes.
SOCIAL: A tax consultant can provide business owners with important guidance and support to help you
minimize your tax liability. Read our latest blog to learn how a tax consultation can benefit your
company.