“Some kind of night into your darkness. Colours your eyes with that’s not there.” -Mazzy Star
Taxes…most people consider them the dark side of running their business. Small business owners are always looking for ways to lower their taxable income. Many of them make purchases for random business items so they can increase expenses to decrease their income. Expenses should be to help your business stay legal and enhance growth…not just to avoid taxes.
Here are a few good options to lower your taxes:
Further your education. Many business owners are lifetime learners and are always looking for new skills. Doing so could also earn you the Lifetime Learning Credit. The maximum is worth $2,000 per year and helps pay for college and education expenses that improve your job skills. Be sure you review the details to qualify. https://www.irs.gov/credits-deductions/individuals/llc
You can also invest in your children’s education. Most states offer 529 plans which help families pay for future expenses associated with college or other qualified education expenses. The contributions grow tax-free and the money won’t be taxed when it’s taken out. Many states offer a full or partial tax deduction for credit for the 529 plan contributions.
Contribute to a health savings account (HSA). If you have a high-deductible medical plan, you may be able to contribute to an HSA. The unused portions can roll over indefinitely and grow tax-free.
Last but not least…contribute to your retirement! This is a must and not just to lower your taxes. You may consider a SEP IRA, solo 401k or a SIMPLE IRA. Be sure to speak with a financial planner to determine the right option for you.
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