A new business means bearing various financial expenses. One of such financial burdens is tax. Every year there are changes in the tax regime that affects the entire business planning strategy. To save your company from getting tax penalties, you need to stay up to date with changing tax provisions and use them to save the corporate profits. 

The IRS understands the need to save money so that your company can operate efficiently. That is why they have set up the Internal Revenue Code to help businesses with numerous tax-saving provisions. 

In this article, we will tell you about these tax-saving provisions that will help in your business’s growth. 

Qualified Business Income Deduction

The businesses (sole proprietorships, S corporations, partnerships, and some trusts and estates) commencing their operations after 31st December 2017 are eligible for the Qualified Business Income (QBI) deduction. This tax deduction provision (Section 199A) allows the eligible taxpayers to save up to 20% of their qualified business income from tax. Moreover, this deduction is entirely different from business expenses deduction. So, you can enjoy the benefits of both at the same time to save more tax. 

Tax Credits

Various business owners think that the term Tax credit and tax deduction are the same, and they often use it interchangeably. In fact, tax credits are incentives provided by The US federal government to motivate businesses. There are several tax credit types like going green, hiring employees, providing health coverage, etc. Your business can use the same money and invest in strategies that can drive their overall growth. 

Besides that, to cope with the situation of Covid-19, the government has also started two new tax credits, i.e., Employee extension credit and sick leave for the employees affected by a coronavirus. 

Retirement Plan for Employees

The easiest way of saving money on taxes is by creating a retirement plan for your company employees. The experts at https://silvertaxgroup.com/tax-consulting-services/ confirmed that one could invest in different retirement plans according to business objectives and needs. However, remember that the plan must be aligned as per the guidelines of section 401(k) and 403(b). under the IRS to take the benefits of a retirement plan. 

Writing Off Bad Debts

The time for the financial year to end and filing of tax returns is the same, and you can benefit from it. You should go through all your business accounts and get the accounting data of all the year’s bad debts. Writing off these bad debts and deducting it from your total income of the year will reduce the payable tax amount.

Stay Connected with your accountant

Consulting your accountant for every financial step is wise, especially when it is concerned with tax payments, as you do not want to be held liable for non-payment of tax. 

To Sum it Up

Paying tax is a crucial responsibility of every individual and business. Taxes can indeed get very confusing for a layman starting a new business, and without proper guidance, you put your business at the risk of losses. However, if you stay up to date with the changing tax regimes and consult with your accountant regularly, you can save hundreds of dollars on your tax.