1. Do your research or hire an outside consultant. Taxes are not something to be taken lightly. There are penalties, fines, and punitive interest costs for inappropriate filings. Sales tax, payroll tax, and income tax must be calculated correctly. If you don’t have in-house help, you may want to use an advisor like J.H. Cohn or Janover Rubinroit if you run a larger business, or the Corporate Tax Network if you have up to 20 employees.
2. Take advantage of deductions. There are many deductions you may not have known were available. Taking advantage of deductions allows you to subtract business costs from gross income. Some deductions that small-business owners should research and take advantage of are automobile deductions, home-office deductions, travel expense deductions, and entertainment expense deductions.
3. Know how to classify your business. Correctly classifying your business can help you reduce your tax rate. Different business structures face different tax liabilities and rates, so it’s best to research and decide which type of business is best for you. Some options are sole proprietorship, partnership, limited liability corporation, S corporation, and C corporation. You can learn more about these different types of businesses by clicking here.
4. Control your tax due date. As a small-business owner, you may want to ask for an extension on your taxes; however, extension requests are not always approved. There are other options for delaying your due date, including delaying certain actions and accelerating others. Some actions you may want to delay would be the collection of payments and the sale of assets. These are two actions best left until the new year. Some actions you may want to accelerate are purchasing real estate and equipment. These will all help to delay the process.
5. Negotiate a monthly payment. If you’re having trouble making your tax payment, it may be beneficial to negotiate a monthly payment with the Internal Revenue Service. A monthly payment will allow you to pay off the IRS in smaller increments. There are different payment plans based on need and eligibility. Sometimes these payment plans can be beneficial to small-business owners; however, be wary of interest payments that may end up being more harmful than helpful.
This article originally appeared on Forbes.com.
You may also be interested in:
1. “7 Top Tax Deductions for Small Businesses”
2. “Six Smart Tax Tips for New Business Owners”
3. “Do You Have Employees With Disabilities? You May Qualify for Tax Benefits”
4. “Taxes and Your Home-Based Business: Consider These Tips”