Tax season is here with us again. While businesses struggle to keep up with smooth operations, they are also grappling with the challenge of beating the deadline for filling 2023 income tax information returns.
But even as they aim to achieve legal compliance, what measures can small business owners adopt to reduce their tax bill and propel their businesses to success?
Below, we have rounded up for you strategic actions you can implement for a smooth return:
Understand Income tax
Besides speaking to an accounting professional to understand the specifics surrounding tax issues and various changes likely to affect your business, it is also wise to familiarize yourself with taxes applicable to your business, such as Pay as You Earn (PAYE), Corporate Tax, and Value Added Tax (VAT).
Since knowledge is power- accustoming yourself to various obligations ensures you avoid penalties and take advantage of available reliefs.
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Keep Accurate Records
Establishing an accurate and organized financial record keeping is handy for your business. It helps track income, expenses, deductions, and credits and also aids in the tax filing process.
Perhaps a more efficient way to make the filing process faster and easier is by investing in tax filing software to streamline the process online. Most of them automatically account for tax laws and rules.
It can simplify your filing process, reducing the chances of errors and making it easier to leverage various opportunities. Additionally, the beauty of it is that it can be an effective way of filing taxes.
Employ Family Members
Hiring family members can be a resourceful way to keep income within the family while gaining tax advantage. For instance, you can employ the services of your spouse or children and be deducted as a business expense.
Picture this- by seeking the services of your wife, perhaps as an executive for your business, you can defer twice as much income. Even if your spouse isn’t working with you full time, they may still be involved as much such that they have a role.
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If you have kids, it can also be beneficial if they are on the payroll, just like regular employees. Children normally fall into a lower tax bracket, so instead of using your salary to pay for their expenses, you can pay them a salary. This way, they cover their expenditures at a lower tax rate and might not pay taxes if their income is below the standard deduction.
Always Plan a Head
Avoid last-minute tax payments by planning ahead of time. A good way of ensuring you maintain this is by setting aside funds regularly to cover your tax liabilities. By doing so, you will be able to manage cash flow and enable you to avoid penalties for late payments.
Additionally, you can manage effectively your cash low and potentially reduce your taxable income by utilizing financial tools such as title deed loans and asset financing. [Get Affordable Loans with Jijenge Credit Ltd]
By successful employing them, they can help you acquire essential business assets without larger upfront costs. Interest paid on these loans is frequently tax-deductible, offering an additional advantage. This means that structuring these loans [Affordable loans in Kenya] can lead to substantial tax savings and improved financial management for your business.
In conclusion, tax laws frequently change. Staying updated about new regulations and tax incentives could tremendously impact your business. Consulting with a professional can also help establish the ins and outs of tax billing.
Remember, every shilling counts, and strategically implementing these tips and more can set you up for success this year.
