In any business, one thing is common – taxes. Whether you are running a big firm or a small company, you must pay taxes to the government. Being aware of the taxes to pay is essential as any mistakes can turn out to be costly.
Taxes are unavoidable. Therefore, as a business minded person, you need to plan and figure out ways in which you can reduce the income that is redirected to paying your tax
Ways to minimise tax bills
Let us look at some fundamental legal ways you can use to reduce the tax paid.
- The increment of Employees' benefit: Instead of increasing the employees' salary you may consider adding contributions to their benefits such as health insurance. This plan will save on income tax and payroll taxes.
- Income deferments: When paying employees in the last month of the year, you might consider delaying a bit and say, pay them at a later date in January. This action means that you won't have to declare your income immediately for taxation.
- Donating to charities: Making charity donations to organisations can save money on tax. The charity organisations should be registered, and you should retain the donation receipt to act as proof.
- Hiring contractors: If you can’t manage to pay the payroll tax, consider hiring independent contractors. With them, you won't have to pay any payroll tax.
- Retirement plan: Making contributions to your retirement plan can offer you a tax deduction from the donation. You can extend this to your trusted employees.
- Reimbursements: Try to design a plan on how to reimburse your employees on expenses they have incurred on behalf of the company. You should make the repayment without including it in their income.
The above tips can help you save on taxes, and they can also help your employees benefit from them. They are essential for both start-up and established firms.