Starting your own business can be challenging and rewarding at the same time. Operating your business as a sole proprietorship is one of the most common ways to start a small business. If you are operating a small business as a self-employed individual, then it’s likely that you have taxable income.
1.Save on Business Income
The first way to save on taxes as a small business owner is by taking advantage of the new deduction for qualified business income from pass-through entities like partnerships, LLCs, and S-Corporations.
To qualify, your business must be organized as a sole proprietorship, partnership, LLC, or S-Corp, and you must have less than $157,500 in taxable income if you’re single or $315,000 if you’re married filing jointly. The deduction is equal to 20% of your qualified business income.
2.Get a Credit for Hiring Veterans
If you’re looking to hire some help this year, the new Work Opportunity Tax Credit (WOTC) can save you up to $9,600 per veteran. To qualify, the veteran must have been unemployed for at least four weeks before being hired and receiving food stamps for at least two months during the year.
3.Deduct Business Expenses
One of the most significant tax breaks for small businesses is the ability to deduct business expenses. This includes everything from office supplies and marketing expenses to travel and entertainment.
4.Get a Tax Break for Buying Equipment
If you’re looking to purchase some new equipment or machinery for your business, you may be able to take advantage of the Section 179 deduction. This allows you to deduct the total cost of specific business-related equipment and property up to $500,000.
5.Take Advantage of the Home Office Deduction
If you work from home, it’s important to be aware of the various ways that your location can impact both taxes and liability. To qualify as a “home office” for tax purposes (and therefore deduct some costs), a space must meet several criteria-it needs exclusive use by business endeavours; documentation proving this usage pattern through receipts or other records is also necessary when filing claims on behalf others who may employed workers here too.
By taking advantage of these tax breaks, you can save significant money on your taxes this year. Be sure to talk to your accountant or tax advisor to see which ones apply to your specific situation. For more information on these and other tax breaks, visit our website.