Small business and self-employed workers have unique tax responsibilities. Applying the right deductions is critical. For instance, if you work out of a home office, you may be eligible for a deduction. You might also deduct the cost of vehicles, office equipment, travel and other business-related expenses. If you’re starting a new business, it’s important to take advantage of any tax relief.
Tax planning has many short-term and long-term benefits. The main short-term benefit is more money in your pocket after tax season. Long-term benefits might include any of the following, depending on your situation:
- Solving tax issues: If you owe back taxes or have other tax issues, planning can help you address these concerns and find a solution.
- Building a college fund: Tuition costs have risen exponentially in previous decades. If you want to build a college fund for your child, you can take advantage of the American Opportunity Credit to help you minimize future education expenses.
- Supporting your business: Starting or sustaining a business is challenging for many reasons — tax liability need not be one of those reasons. With small business tax planning, you can boost your business and accumulate more resources for growth.
- Saving for retirement: Your retirement contributions can grow tax-free over time, resulting in a sizable nest egg for the future. Retirement might seem a long way off, but early planning is vital for a comfortable post-career life.
- Maximizing an estate: If you have an estate large enough to incur state or federal estate taxes, proper planning can make a notable difference for your family’s finances, reducing your liability.
- Securing more for your heirs: With thoughtful tax planning, you’ll have more to pass on to your heirs. You can also work to minimize your heirs’ inheritance tax liability, so they can keep more of your lifetime earnings.