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Are you looking for ways to keep more of your hard-earned money as a small business owner? One of the best ways you can do so is by reducing your taxable income. Other than keeping track of all your expenses and writing off things where you can, Edgewater CPA Group can help you find other ways to reduce your tax bill. Through our strategic accounting services and these little-known ways to reduce your taxable income, you can save some cold hard cash.
1. Employ a Family Member
It’s true! The Internal Revenue Service allows small business owners to hire their family members and shelter some of their earnings from taxes. This includes hiring children and spouses. For example, any sole proprietor can hire their spouse and avoid paying the social security, Medicare, or Federal Unemployment Tax Act tax on the spouse’s wages. Depending on the benefits your spouse may have through another job, you could also put aside retirement savings if they work for your company as well.
2. Max Out a 401(k)
As a small business owner, you likely give up the 401(k) matches that come with being employed by another company. However, there are still some options for you, and they can all help you lower your taxable income. For example, you might look into putting money aside in a Roth IRA or even a Simplified Employee Pension Plan (SEP). Just make sure you research your options and understand how they lower your tax bill come tax time.
3. Save for Medical Expenses
If you’ve had a corporate job before starting your business, then you’re likely familiar with saving for medical expenses. As a business owner, the IRS allows you to set aside money in a Health Savings Account if you have a high-deductible health plan. These savings accounts often come with a triple tax advantage: The contributions are pre-tax, the money grows tax-free, and the withdrawal or usage of funds is tax-free, just as long as you use them on qualifying medical expenses.
Find Tax Experts to Guide You
You likely wear many hats if you’re running a business, but a tax expert isn’t usually one of them. That explains why so many businesses in Indianapolis trust the team at Edgewater CPA Group. We help small businesses just like yours reduce their taxable income and grow their companies. So, if you’re looking for an accounting organization that also offers tax prep, payroll services, and controller services, give us a call at (888) 317-4835.