4 Helpful Tax Tips for Small Business Owners

There are many potential tax tips small business owners might need to know. When tax time rolls around, everyone scrambles to try and find a way to keep more of their money. Here are a few helpful tax tips for small business owners to consider.

1. Detailed Depreciation

As a business owner, one of your greatest tax deductions comes in the form of depreciation of assets. Nearly anything that your company owns can be depreciated when it comes to filing your taxes. Many business owners take a very general approach to this part of the business. This is done because it saves them time and it is difficult to detail everything. However, the more items that you can depreciate, the bigger tax deduction you are going to get. Therefore, you should consider every computer, every light bulb, every desk, and anything else that you can think of in your company that can be depreciated. According to section 179 of the tax code, you can also depreciate up to $100,000 of qualified assets in the first year. This allows you to get a bigger initial tax deduction than if you were to stretch out the depreciation over the individual lives of the assets.

2. Do Not Forget Cash Payments

Many business owners try to hide cash payments instead of reporting them to the IRS. While you might get away with this in some situations, it could eventually catch up to you. If the payment showed up on the books of someone that happens to be audited, it could eventually come back to hurt you. Therefore, make sure that you keep a record of each cash payment that you receive, including cashiers checks or money orders. Otherwise, you might be looking at a hefty tax penalty in the future.

3. Consider Green Incentives

In today's business world, you need to get every tax break that you can get. One way in which you can get a nice tax break is to look at making certain "green" changes to your business. The government currently offers several different green incentives to business owners for complying with certain standards. For example, if you can reduce your energy consumption, you may be able to claim a tax credit. Things like replacing windows or putting in a more efficient heating system may be able to trigger a tax credit for your business as well. These moves could potentially help you save money on your utility bills and on your taxes.

4. Retirement Contributions

As a small business owner, you will want to consider making large contributions to your employee's retirement accounts. If you have a 401k or some other qualified retirement account for your employees, you should consider applying extra profit into their accounts. The money that you contribute can be deducted from your taxable income which can present you with a substantial tax break. This will also help you make your employees happier as well.