How To Hide Small Business Income – For small business owners, taxes can be stressful. You may have a lot of work, and the last thing you want to do is hand over more of your hard-earned business income to the government. Fortunately, there are many tax-saving strategies that can reduce your tax liability as a business owner. If you need ways to lower your taxable income this year, consider some of the following.
One of the best ways to lower taxes for your small business is to hire family members. The Internal Revenue Service (IRS) allows a variety of options, all with the potential benefit of protecting income from taxes. You can also employ your children.
How To Hide Small Business Income
According to Scott Goble, a certified public accountant (CPA) and founder of Sound Accounting, by employing family members, “small business owners are able to pay lower marginal tax rates or be exempt from income taxes that are paid to their children”.
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For example, sole proprietorships are not required to pay Social Security and Medicare taxes on their children’s wages, nor are they required to pay Federal Unemployment Tax Act (FUTA) taxes. It is important to note that the benefit must come from a legitimate business purpose. The IRS also allows small business owners to deduct taxes by employing a spouse who does not pay FUTA taxes. You may also be able to set aside retirement savings for them, depending on the benefits they can get through another job.
As a small business owner, you opt out of a 401(k) match that was matched by your employer. However, there are several retirement account options to maximize your retirement savings and receive valuable tax benefits. For example, with a single-participation 401(k) plan, the IRS allows you to contribute up to $57,000 in total retirement contributions. Some of these retirement planning tools include:
The IRS website has a number of different retirement plan options for business owners to choose from as a tax-saving strategy.
One of the best ways to lower your small business taxes is to set aside money for health care needs. Medical costs continue to rise, and while you may be healthy now, saving for unexpected or future health care needs is critical. If you have a qualifying high-deductible health plan, you can do this with a health savings account (HSA).
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“I also encourage any business owner to explore using an HSA. As health care costs rise, many businesses want to reduce the cost of health insurance,” said Sean Moore, CFP, ChFC, Smart Wealth Advisory. “By using an HSA, businesses and employees can reduce taxes and potentially related health care costs.”
Moore explained that the savings come from three main areas, also known as the triple tax advantage: your contributions are pre-tax, they’re tax-free, and withdrawals for qualified medical expenses are tax-free.
As a small business owner, you don’t have the benefit of having your employer pay some of your taxes. You are responsible for all Social Security and Medicare taxes. If your business is taxed as a Limited Liability Company (LLC), you will be required to pay these taxes, but in some cases you may be able to exempt your employer from half of these two tax obligations. For some small businesses it can be a reasonable business turnaround. While there are many things to consider in this transition, such as paying a reasonable salary and other associated risks, it can be a great way to reduce your tax liability.
If you travel a lot, you can reduce sales tax. Business travel is fully deductible, but personal travel does not qualify for the same deduction. However, to maximize your business travel, small business owners can combine personal travel with legitimate business purposes. Any frequent flyer miles earned from business travel can also be redeemed for personal travel at a later date.
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With smart planning, you can reduce your taxable income as a small business owner and make more money work for you. Remember to consult a tax professional to make sure you qualify for the potential savings discussed here.
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However, not everyone can turn their dream of running a business into reality due to lack of capital. Now we have a solution!
Here are some practical ideas that we think can bring you big profits without burning a hole in your pocket. Watch this video to get started:
Below is a list of low investment business ideas that can also be profitable. You can start your own business now and turn your passion into a career. Let’s take a look at some small business investments in India.
Dropshipping is one of the best profitable small business ideas today. This is a retail fulfillment method where you can open an online store without keeping any inventory. So you can start a business with limited funds without investing a penny in inventory.
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Whenever a store makes a sale, the product is purchased by a third party and shipped directly to the customer. Simply put, you make a sale, pass the order to the supplier, and he ships it to the customer on your behalf. So you don’t need to store or handle inventory. Saves you time and money.
Products can be selected from multiple suppliers. However, it is recommended that you first order a sample product from the supplier to ensure that it is reliable and the product quality is suitable for an online store.
With the dropshipping model, you don’t need to focus on purchasing or maintaining inventory. You can fully focus on marketing and customer service for your online store. It’s worth noting that the credibility of your store will depend on the quality you offer and the order fulfillment strategy you use. Hence, it is one of the best small investment businesses in India. You must control both to ensure business success.
It is a low investment business idea that you can also use to test the market and find the best before investing in your products and launching them.
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As one of the fastest growing markets in India, starting a business in the courier industry is another low-cost, high-margin business idea. The recent change in the e-commerce industry has inevitably helped the business of courier services to grow at an astonishing rate.
When starting a business from scratch, which can be expensive, you may consider getting a franchise from an established courier company. Many popular courier companies offer their franchises at low prices. Additionally, you have access to their technology-related infrastructure as well as training and development.
Online food business is one of the most popular profitable small business in India. Bakeries are also very popular. If baking is your cup of tea, you can consider opening a bakery and earn money by sharing homemade recipes. The best thing about this low investment business idea is that you can start with the kitchen itself. All you need is an oven and ingredients!
Cakes are an integral part of all celebrations. However, you can also consider selling other baked goods such as different types of bread, muffins, cookies and pizza. Not only is this a unique business idea, but it’s also profitable!
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While it took years for companies like Ovenfresh to get to where they are today, many business owners are able to grow their numbers in just a few months by doing business online. Expand your reach by simply registering your bakery on various online food delivery platforms.
The fashion and lifestyle industry in India is booming as people become more fashion conscious. Indian online fashion trade is expected to grow to $111.4 billion by the end of the year