Tax Loopholes for Small Business
When you’re starting a small business, taxes are one of the major sources of stress. However, what if we say you can get around all these different types of business taxes? While you may not be able to get rid of them altogether, you can certainly get deductions. The trick is to know all the right tax loopholes for small businesses.
Suppose you aren’t aware of these tax loopholes for LLCs and small businesses; there is no need to worry. This article will cover the major tax loopholes you can benefit from.
Tax Loopholes for Small Businesses
Following are some tax loopholes for business owners you should definitely know about:
- Home Office Deduction
If you’re someone who usually works from home, then this will be among your go-to business tax loopholes. However, to qualify for this deduction, your central place of business should be your home office. You should be working there exclusively and regularly for all your administrative and management activities.
Other than these requirements, it’s a fairly manageable loophole. It’s one of the most overlooked tax deductions, and there are no limits to what is considered a home office. Whether you’re a homeowner or renting a space, you are suitable for this deduction.
- Pay for Health Insurance
Healthcare can be expensive, but tax loopholes for small businesses can help you with the costs. In big businesses, workers usually earn health insurance security from their employers. However, you can decrease the cost of health insurance and save money every year if you’re self-employed.
It’s the same for small business owners. You’ll have to deal with a bit more paperwork to ensure the deductibility of your workers’ premiums. But by the end, you only have to pay 50% of your employees’ premium costs.
- Hire a Family Member
One of the best tax loopholes for small businesses is hiring a family member. By hiring your children, you can shelter their income from taxes. You could even eliminate the tax on them altogether by paying them less than the standard wage.
However, the same does not apply to hiring your spouse. If you choose to hire them, their salary must suit their jobs and accommodate tax deductions.
- Deduct Travel Expenses
If your work requires you to travel a lot, among all our tax loopholes for small businesses, this one is for you. This is because traveling for the sake of business is fully deductible. This includes the cost of things like travel, lodging and meals, transportation services, business calls and communication, etc.
Although personal travel doesn’t have the same benefits, you can take advantage of a loophole. Just combine a business purpose with your personal travel as well. It doesn’t have to be anything major. For example, you could participate in a conference or seminar taking place in your destination city.
- Plan Your Retirement
As a small business owner, you can enjoy more tax loopholes for small businesses through your retirement plan contributions. If you are self-employed and have no other staff, you can even have a solitary 401(k).
With this 401(k) account, which you can use to keep all of your earnings in the shape of tax contributions. However, the contribution amount will be under an annual limit. Apart from this, you may even be able to benefit from employer contributions. Your qualification will depend on the net profit you get by being self-employed.
Conclusion
Taxes can be discouraging when you are a small business owner. However, knowing the right tax loopholes for small businesses can help you save a lot. Just manage your small business according to these loopholes.
Hire family members and make sure to have a home-based office. Don’t miss out on the benefits you can get from your health insurance, retirement plan, and travel expenses as well.
