To run a business successfully and enhance tax saving, you must stay up-to-date with the changing tax climate. Even if you don’t have a finance background, you need to put efforts to learn how you can decrease taxes along with handling the administrative tasks.
Businesses have many different costs; however, the main operating expenses are rent, phone and utilities, employees’ salaries, equipment, licenses and tax deposits, and marketing budgets. In this blog, you will learn about some helpful tips for agency management and maximize your savings. Let’s start!
Understand the section 199A
Also known as the Qualified Business Income deduction, Section 199A is a new tax law that is beneficial to small business owners. However, the benefits you receive depends on how your company operates.
It provides taxpayers with deductions for qualified business income, which should come from a qualified business. The main part of this new law is the 20% deduction on income, but not everyone eligible for this.
Nowadays, most of the businesses have full-time employees or operate on a contractual basis. Section 199A provides benefits to businesses that have the right number of W-2 employees; however, the number can change depending on the business structure. Salaries are not the only thing that affects 199A, thus talk to an expert accountant to make the right decision for new hires.
Get benefited from Augusta Rule
Augusta Rule allows US residents to rent their residential properties for up to two weeks annually without paying any taxes. This provides business owners with the opportunity to use residential spaces as meeting places.
Suppose, you have a meeting with international clients every month. In this case, you can use your home for business purposes. The “14 days per year” condition should be met, and you need not declare the income you’re getting for 14 days of renting.
It’s important to note that your home should have a dedicated space to be used for business purposes. Also, keep all the documents (including pictures of the home office) ready.
Don’t forget Entertainment expenses
As per the new guidelines of the Internal Revenue Service, the Tax Cuts and Jobs Act eliminated the deductions for any expenses related to entertainment activities.
Taxpayers may continue to receive 50% deduction of the cost of business meals if the food/beverages aren’t considered lavish. The meals may be provided to a consultant, business customer, client, or contact.
If food and beverages are purchased separately during an entertainment event, they will not be included in the entertainment slot.
Get professional help from a tax strategist
Don’t be confused between tax strategist and accountant.
A tax strategist specializes in helping companies design and implement effective strategies for the future while an accountant handles already created financial decisions.
Find a professional tax strategist who can help you create the roadmap that matches with your business objectives and helps you to cut taxes.
The bottom line is—tax saving is one of the major concerns for businesses. Staying up-to-date with the new tax changes and adjusting your business strategies accordingly can not only help you put more money in the earning box but accelerate your business growth as well. So, what are you waiting for? Talk to your tax strategist to get sound advice on tax saving today.