Continuing from our last article, today we will discuss another 4 Business Accounting, Tax and Legal tips for any small business which may be used when getting your business finances in a gear during the year:
Pension or Annuity Plan.
Most entrepreneurs, I speak with are not even aware of the importance of having a Pension or Annuity Plan, as a small business owner or freelancers. The common statement made is that cash flow is tight. An Annuity or Pension Plan is considered a Long Term investment for the future and it is also great for lowering your taxes as an individual.
I suggest that you set up a plan at the lowest minimum value you can and as time goes by, you can increase the value or open another pension or annuity plan at a different maturity age or period. I personally have two pension plans. At present, the annuity or pension allowance is fifty thousand dollars per year.
Turn charitable donations into business expenses.
Charitable donations are a great tax benefit to help reduce your taxes. However, if you give money to charity in exchange for advertising, it's a business expense.
Defer Income, if necessary.
You can defer your income by shifting your billing especially if you believe your taxes will be too high for you to pay off. I suggest you keep proper track of your income and expenses throughout the year using adequate accounting software. Please consider consulting with an accountant like myself before going further.
Increase expenses, if necessary.
Just as you can defer your income, you can increase your expenses during the year to also deduct your taxes. You can make some year-end business purchases to reduce your business taxes such as a new vehicle.
For example, as a sole trader or partnership owners, you can increase your annuity or pension figure to the limited value of $50,000 per year which will help you reduce your taxes at the year end.
Next week, we will discuss the last three tips.