How to Reduce Taxable Income When Running a Small Business?

Reduce Taxable Income When Running a Small Business

Small business owners really find it tricky to pay taxes to get a lump sum Business Tax Return to the government. Especially, when you are somewhere like Australia, the tax amounts are reasonably high for a small business owner like you.

Conversely, there are various effective ways to reduce the taxable income for your small business. By adhering to these strategies, you too can reduce the taxable income of your small business optimally. Some of these ways are given below.

Travel frequently

When it comes to Small business tax filing in Perth, Australia, small business professionals need to do it strategically. The first step in doing this is by travelling as often as you can. This is because business travels are subject to complete tax exemptions.

Most of your travels have to be business travels although. This means that casual travel won’t get you this facility. To get the best of results try to utilize any of your casual travels even with a minor business purpose. Additionally, you can also optimise the airline miles earned from your business travel for your personal travel afterwards.

Alter the setup of your business

Small business owners are liable to pay all kinds of relevant taxes all by themselves. Whether it’s the Social Security Taxes or Medicare Taxes, they need to pay everything. They don’t even get the assistance of an employer, who can pay certain parts of their taxes.

To get rid of these hassles, you simply need to alter the structure of your small business a bit. This is considered one of the finest strategies to reduce your taxable income considerably.

woman open a small store

Focus on your healthcare requirements

In order to decrease the taxable income of your small business reasonably, you need to stress your healthcare needs first. All you will have to do is to save a reasonable sum of money related to your healthcare needs. Saving a lump sum amount of money to meet certain health expenses can be quite beneficial for you.

First of all, it will keep you prepared for any unexpected ailment in future. Secondly, it will save all the exorbitant costs of that particular disease for which you weren’t ready at all.

How to do this?

Some experts opine that there are chiefly three ways to do this. Firstly, by getting health insurance issued and paying its premiums on time. These are known as the pre-tax amounts. Secondly, they are completely tax-free. This means that you don’t have to pay any taxes while paying its premiums.

Finally, when you will withdraw the amounts to meet your medical costs, you don’t have to pay any tax then. This is a great way to reduce the taxable of your small business as well.

1. Opt for a retirement scheme

Small business owners are eligible to provide matching contributions to his/her employees. Here where the significance of a comprehensive retirement plan comes into play. When it’s somewhere like Australia, there are plenty of retirement plans for you to choose from. This in return will increase your tax savings to a great extent. That’s how you can ensure to reduce your taxing expenses favourably than before. All you will have to do is to research on the internet quite well. You will come across a lot of suitable options there.

What’s next?

Just choose a compatible retirement plan according to the current profile of your small business. This in return will help you to deduct the taxable income of your small business quite a lot.

2. Hire a family member at your firm

This is one of the most sought-after ways to decrease the taxable income of your small business. You just have to appoint any of your family members as one of your organization’s employees. If you wish, you can recruit any of your children as well.

This has been stated by the Internal Revenue Service (IRS) of Australia. Apart from this, there are other family members too which the IRS allows you to recruit. The chief objective to do this is to reduce the taxable income of any small business professional optimally.

The possible benefits

Experts say that there are many advantages of hiring your family members for your small business, especially your kids. In future, your kids will not have to pay taxes or any income tax to the government of Australia at all.

3. Optimize the Accountable Plan

An accountable plan refers to reimbursing your workers for travelling, recreational and other purposes according to the IRS criteria. When it’s about getting lump sum exemptions in Tax Accountant Perth for your small business, this strategy is really helpful. An accountable plan actually lets you deduct these necessary expenses from your employees. In spite of this, you can’t display these reimbursements to your employees as their mere incomes.

How it helps?

By doing this, you can save the taxes of your small business reasonably. This in return leads to the reduction in the taxable income of your firm a lot. So, what are you waiting for? Follow some of these ways discussed above right now. In that way, get huge exemptions in your small-business Tax Return as well.

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