Ways to Reduce your Tax Burden
Everyone worries about taxes and looks for ways and
means of reducing the tax burden. When you have a small business of your own
you must up date your knowledge of tax laws that pertain to “small businesses.”
As a business owner you must understand clearly about accounting systems and
tax planning. Sit down with your accountant and plan on ways of maintaining business
expenses, filing receipts, planning on “tax saving” investments, and a strategy
for running the business in the most
beneficial way.
Did you know
that:
1. According
to law you can reduce your tax liability by hiring family members to carry out
work in your business. Pay your children and spouse to perform assigned duties.
This way you can shift from higher tax rates to lower ones.
2. Consider
hiring independent contractors instead of employees. You will save on payroll
taxes. However ensure that you meet the Tax Administration’s criteria.
3. Think
about “deferring income” postpone receiving money to January instead of
December. This means that payments received will be up for “tax” calculations a
year away. However ask your accountant’s
advice as the benefits are dependant on profit and losses for the year and your
corporate legal structure.
4. Take
advantage of tax deductions allowed for charitable donations. Make donations in
November or December instead of January so that you can include the donations
for tax deductions in the current year. Ensure the organisations are on the
Approved list
5. Maximize
your expenditure on equipment and office supplies. Buy in advance for a quarter
and use the tax deductions allowed in the current fiscal year.
6. Include
expenses of business related travel in the current year.
7. Plan
a retirement plan and make payments before the end of the year. This will
reduce your income for the year and proportionately the tax due. Be sure to
check on the limits. Plan a feasible and beneficial strategy with your
accountant.Now you can set-up IRAs in Jamaica and elect for up to transfer 20%
of your Income Tax-Free into the Plan
9. Be sure to deduct from your taxable income
money paid to licensing fees, businesses taxes, and annual memberships to
businesses related organizations. Be sure to deduct interest paid on borrowings
for running the business and related fees. Insurance premiums paid to insure
the business office and machinery are eligible for tax deductions. Make a list
of your memberships and check which ones are eligible for tax deductions.
10. Check whether you have deducted management
and administration expenses as well as money spent on maintenance and repairs
of equipment.
Decide whether a cash accounting system or accrual
one will benefit your business. The tax deductions are different depending on
the system you use. When setting up your small business take the advice of a
tax and accounting professional as to which accounting system would be most
suitable.
No comments:
Post a Comment