Let’s face it, companies are also a type of human being that works to produce money in the process. But as with every human being, to work efficiently, companies also have to spend some money as well. But we know that the prime goal of any organization is going to be income generation and revenue production. Since we live in an economy, each company has to pay some amount to the government to keep things running as smoothly as possible.
But since every company wants to save as much money as possible, today we are going to be showing you, few ways by which you can save a lot of money on your taxes, so without further ado, let’s get started.
Apply For a Tax Credit
One of the first things that you can do to save a significant amount on your taxes is by applying for the research and development tax credit, which enables you to get upwards of 10-20% of your product development costs as a tax credit to offset income taxes or social security taxes. However, the R&D tax credit application process is complex and time-consuming, requiring you to identify eligible projects and expenses per the IRS tax guidelines, write technical narratives for the projects, prepare project financials, compile supporting documentation and evidence, and fill out the associated tax forms. Using an R&D tax credit software will help you calculate the tax credit and prepare the forms, saving you a ton of time.
Fund a Retirement Plan
We know that every company that has ever existed has several employees working for them. This means that there is a significant chance of tax reduction in the process. All you have to do is fund a retirement plan for your employees, not only this is going to build employee relations, but this is also going to allow you to save a large sum of money on your tax returns. There are multiple options for you to choose from, but the main thing that you have to take into account is that the plan that you choose for your employees should be approved by the IRA. Plans such as 401k or 403b are widely used by the industry for retirement plans so you can look into that as well.
Every company that is ever going to do some sort of work is going to need some equipment to keep their operations running. Well if you are buying equipment, then you can use that equipment and reduce the amount you paid for it form your taxes. The maximum amount that you can deduct from your taxes for your equipment in 2018 was $1 million.
The benefit of this is you can immediately deduct the cost of the new equipment from your taxes when you buy them and later you can also deduct a significant amount for your equipment depreciation.
Write Off Bad Debts to Reduce Income
One thing that you can do to reduce the amount of tax that you have to pay is at the end of the fiscal year, write off any bad debts that you have with your customers, clients, vendors, loans, or anything else. Bad debt is considered as an amount that you aren’t likely to get paid back. So at the end of the physical year, you should write off all your bad debts so that it decreases your total income and you don’t have to pay as much as you would have to before.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.