As a business owner, you may end up paying a lot of money as taxes if you are not aware of how to reduce your tax liability on the business income. This is unfavorable for new businesses without a question.
Ways to reduce taxes on the business income earned!
Travel expense
As part of your role as an entrepreneur to meet clients, prospects, etc., you do need to travel. The amount won’t be taxed if expenses are filed to the company account.
Depreciation
Manufacturing company owners enjoy benefits like greater depreciation on machines and equipment. In addition to the regular depreciation in the year new equipment is installed, the business is also entitled to additional depreciation of up to 20%. You won’t have to pay additional taxes on this 20% if you claim the additional depreciation.
Applying for housing loans
You can claim tax benefits on your business ITR (Income Tax Return) by using the interest on housing loans. If the PAN card is linked to the company, a monthly interest deduction on the housing loan is available.
Donate money
One can claim several tax benefits by donating to registered charities and keeping the donation receipt. This is not only a clever technique to reduce business taxes, but additionally a socially responsible way to do so.
Deduction for qualified business income
The Tax Cuts and Jobs Act introduced a new way of tax deduction for business owners in 2017. 20 % Qualified Business Income (QBI) deduction, is available on the tax return of the business owner. If your business is a sole proprietorship, a S corporation, or a partnership, you are qualified for the QBI deduction. Hence, it is an effective tax-saving method, particularly for the small business owners.
Life insurance premium
Without doubt, life insurance is an important element for a person and their family’s security. It also offers extra benefits e.g. return on investment. In addition, section 80C of the Income Tax Act, allows for further deductions, such as premium paid on it for self, spouse, and children (regardless of whether they are dependent or independent or married, unmarried).
Wait! Don’t miss this!
Don’t forget to use the above ways to save money the next time tax season rolls around!
On the whole, as a business owner, you will have a strong interest in the expansion and success of your business. We at Finaccle, can help you achieve this at the most affordable pricing! Connecting with us will give you access to
- Financial services
- Accounting services
- Taxation related requirements (includes GST return filing , etc.,)
- Legal services and other services related to these domains
Don’t hesitate, contact our team right away if you need any assistance! Stay tuned for more simple and informative content!!
About Sejal Munoth
Sejal, is a BCOM graduate and is currently working with Finaccle for its social media related domain. She has a passion in writing and learning!
