When you start a business, you need to be ready for the obligations that come with it. Besides regular business expenses, you will also be required to remit taxes to state authorities after a certain period, depending on the tax structure that you select.
Even though paying taxes is a legal requirement, it does not mean that the authorities prohibit you from reducing your tax obligations. In fact, most tax authorities provide legal channels that can help you lower the amount of taxes that you pay. Here are a few clever ways that you can do it:
Consolidate Your Business Activities
If you have a business enterprise that generates income from several activities, then these separate activities can be a source of additional tax liability. The revenue generating activities can be evaluated separately by tax authorities, and each of them taxed at a different rate. For you to avoid this, you can consolidate your business activities and run them under a registered company.
Once you consolidate the business activities, you will pay tax at a fixed rate rather than having it calculated and levied on each business activity separately.
Accountable Plans for Your Business
You can use accountable plans to reduce the amount of employment taxes charged on your business. Anytime you reimburse your employees for money they spend on travelling, tools and other costs associated with your business, make sure you use an accountable plan. The plan outlines each allocation in line with the acceptable standards of accounting. Using the plan, you can deduct the reimbursements as normal expenses in the business rather than recording them as allowances to the employees. This way, you will save a lot of money that would have gone to employment taxes.
Go for Non-Taxable Fringe Benefits
Fringe benefits are the additional benefits that you offer to your employees besides their salary. Examples include subsidised meals, company cars, housing and health insurance, among others. Tax authorities levy taxes on some of the fringe benefits, while others do not attract any tax liability. Essentially, if you provide taxable fringe benefits to your employees, the tax burden lies on you and not the employees who enjoy the additional benefits.
Thankfully, you can reduce this tax burden by offering fringe benefits that do not attract any tax obligations. For example, if the authorities levy a tax on health insurance benefits and no tax on subsidised meals, then you can opt to provide meals but not benefits to reduce your tax obligations.
For more tips on keeping your business taxes low, you may want want to work with experienced BAS agents in your area.Share
27 April 2016
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