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Small Business Taxes Simplified

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Running a small business takes an incredible amount of energy on its own. When you add taxes into the mix, it can add a lot more stress. 

No one enjoys taxes, but with this guide, you can definitely learn how to make small business taxes less stressful and save yourself some money along the way.

Read on to find out how!

Keep Track of Your Expenses

This is perhaps the MOST important advice for those who are running a small business. You will need this information to back up how much you are making and have receipt verification of the expenses your business incurred so you can receive deductions off your total taxable income. 

Create a filing system so that any receipt for anything business-related is put in the same spot. This can be clothing you needed to buy for client meetings, coffee or food bought during those meetings, new equipment or technology necessary for your business, and name it. 

Even the location that you work in can be a deduction. If it is a coworking space, keep a record of how much you pay per month. If you work from home, track your home’s square footage, the amount of mortgage or rent, and utilities. 

Small Business Tax Deductions

Remember all those receipts and records you were keeping from the last section? This is why it matters. All of those receipts will get totaled up, and you will put that down on the line to subtract from your gross income. 

After these deductions, your adjusted gross income (AGI) is the total amount that you can be taxed on.  

When it comes time to do your small business tax filing, these tax deductions are going to be incredibly important in saving you money.  

Small Business Tax Rate

Your tax rate is entirely dependent on how much money your business makes and the city and state you are located in. But remember, the tax deductions you apply to your total gross income will adjust the tax rate you find yourself in. Ensure you research what the state and local taxes are in your area, so you are prepared. 

On average, small businesses with only one owner pay about 19.8% in taxes, while businesses with more than one pay around 23.6%. 

Small Business Tax Credit

MANY tax credits are available to small businesses. These often come from providing opportunity and extra care to your employees. A few of these credits are as follows: 

  • For employers who set up a pension plan for their team (Form 8881)
  • The ‘New Markets Credit’ for businesses that invest in organizations helping low-income communities (Form 8874)
  • Credit for providing child-care for employees (Form 8882)  

If ever this becomes overwhelming, help can be close at hand. With tons of articles on small business taxes and information, Wealthability can help you find tax advisors in your area or even partner with you to make your small business taxes a breeze. 

Make Small Business Taxes Work in Your Favor

With some grit, tenacity, and research, you will be well on your way to understanding how to work the tax system in your favor. And remember, if you ever get overwhelmed with your small business taxes, help is out there!

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