How to Reduce Your Business's Tax Liability
Updated: Nov 28, 2022
April 15th is almost here, which means most people are scrambling to schedule appointments with their Las Vegas CPA. While it's better to start late than never, as a business owner, it's best to focus on your tax planning strategies all year long. This will help ensure you're taking all the necessary steps to reduce your tax liability.
Lowering your taxable income is one of the best ways to reduce your tax liability, and there are many decisions you'll make throughout the year that will impact the amount you ultimately owe. Not sure where to start? Here are a few simple tips the experts at our Las Vegas CPA firm want you to know:
1. Understand Your Tax Deductions
Taking legal tax deductions is one of the most effective ways to reduce your tax liability. Unfortunately, many business owners aren't aware of all the deductions they're eligible for. This is one of the reasons why it's so important to work with a Las Vegas CPA instead of trying to file your taxes on your own.
In most cases, you should be able to take a deduction for expenses like:
The cost of purchasing business equipment (computers/monitors, phones, printers, etc.)
Mileage and expenses for personal vehicles used for business
Cost of cell phone bills, if the phone is primarily used for business
Setting up and contributing to certain retirement plans
If you work exclusively from home, you may also be able to deduct a portion of your mortgage or rent, and utilities. Many business owners are nervous about doing this, as it could increase the chances of being audited. However, if you work with a qualified Las Vegas CPA, you'll learn how to take the home office deduction without concern.
2. Time Your Purchases
When you purchase equipment or other supplies for your business, the deduction will apply to the tax year that coincides with when the purchase was made. Depending on your current and projected income, you may find that it's better to either make the purchase right away or hold off until the following tax year. Working with a Las Vegas CPA throughout the year will help you make accurate projections and take advantage of your ability to time your business purchases.
3. Invest in Your Employees
As a general rule, the money you pay to your employees in the form of wages and bonuses are tax-deductible. This is one reason our Las Vegas CPA firm often recommends paying year-end bonuses.
Reinvesting in your employees will lower your company's tax liability while also improving employee morale. In addition, paying higher wages and offering benefits and bonuses will make it easier for you to hire and retain skilled employees.
FAL Is Your Trusted Las Vegas CPA Firm
Every business owner needs a tax professional they can trust. If you're in the local area, we're here to help. We've worked hard to earn our reputation as a trusted Las Vegas CPA firm. We're currently accepting a limited number of new clients. Contact us today at 702-870-7999 to learn more.