Most people think that their tax rate is fixed—but there are ways to reduce the % rate that you pay.
- It can pay to be proactive when it comes to your taxes.…As a business owner, I personally have fallen…into the trap of thinking that my tax rate is fixed.…But with some proactivity,…you may be able to reduce your tax rate.…First, understand where you are from a revenue perspective.…In many countries and with different company structures,…tax rates exist in tiers.…If you're getting close to the end of a tax period…and your revenue may push you to a higher tier,…it may be worth taking action.…This could include deferring sending out invoices…for December, for example, until January.…
Now that revenue is counted as the next year's income…and not subject to the previous year's tax.…On the flip side, you can prepay…some of next year's expenses.…Paying early means that you can take the deduction…of the expense in the current year…to reduce your taxable income to keep you…in a lower revenue tier.…This could be done through paying big ticket expenses…like air travel or service contracts early.…Getting the right business structure is also critical.…
- Determine how business structure and location impact the taxes on your small business.
- Break down the different types of taxes.
- Identify ways to reduce taxable income.
- Recognize strategies to that are helpful in reducing the tax rate.
- Formulate a plan on how to best manage your small business taxes using a tax planning tool.