The ability to reduce taxes is one of the most effective ways to reduce costs and increase survival and competitiveness of business. This blog post will help you if you’re confused about how to reduce your tax while running or starting a small business. To learn about the numerous tax-saving tips, continue reading.

The Top 5 Tax-saving tips are as follows:

1. Keep track of every expense related to your business

You must keep track of every expense you incur for operating your business, no matter how big or small. You could end up paying extra taxes on your profits if you neglect to record the expenses.

By keeping track of your expenses, you can better understand how your business is operating right now, what areas need your attention to improve operational metrics, etc. Over time, you’ll have more control over your company while saving money on taxes.

2. Pay attention to depreciation costs

According to the Income Tax Act, a manufacturing business is entitled to claim an additional depreciation of 20% for any new machinery purchased in that year in addition to the regular depreciation of 15%. Additionally, under Section 35AD of the Income Tax Act, you can claim 100 % of the cost of installing new machinery provided it is part of the company’s Capex plan.

For example, let’s say that you manufacture paints and that you recently installed new machinery to replace the old. In this scenario, in addition to the regular 15% depreciation, you may also claim an additional 20% depreciation. You must pay taxes on the 20% unclaimed amount if you don’t claim the additional depreciation.

3. Use electronic transactions

If your cash payments total is more than Rs. 20,000 a day, you are not eligible to claim any deductions under the new Income Tax Act rules. This will raise your tax liability.

Therefore, it is preferable to split out cash payments over a few days to avoid going over the Rs. 20,000 daily limit. Using alternative digital banking methods, such as a cheque, NEFT, RTGS, or UPI is the best way to make payments because this can minimize errors. Note that a rupee saved is a rupee earned!

4. Reduce Tax at Source

While paying for the services, received from a third party vendor, tax at source must be collected as per the Income Tax Act.

For example, suppose you are paying the leasing firm INR 94,400 (Rs. 80.000 plus 18% GST) for the space you have taken on lease to operate your business. In this situation, you must first subtract 10% from the source as tax, before crediting the leasing firm. As a result, you must subtract Rs. 9,440 from the recipient’s total tax due as tax adjusted, and credit Rs. 84,960 to the recipient’s bank account.

5. Apply for a business loan

If you meet all the requirements for a business loan and you have plans to make a capital purchase or are considering growing your company, or are having working capital issues, consider applying for a small business loan.

Always keep in mind that if the interest rate is on a higher end, the drawbacks will exceed the advantages while evaluating the option’s viability. 

Conclusion

Your techniques of doing business should change in accordance with how businesses are evolving so that you can react quickly to the continuously changing business dynamics. Saving money on costs is one way to do this.

The above- mentioned points are some of the best ways to reduce your income taxes and support the expansion of your business.

Bonus tips!

• Always submit your tax returns on time to avoid penalties
• You can carry forward business losses for up to following 8 assessment years

Hope you found this blog worthy of reading! You can contact our team at Finaccle for the best income tax saving tips to help you save a lot of money in addition to the following :-

• Financial services
• Accounting services
• Legal services
• GST return filing and other services related to these domains!

Book your free interaction with us today! Share this blog with your mates by choosing any platform of your choice below!

Tax planning is a structured financial procedure that looks into taxation options. It determines when and how to conduct business in order to avoid or lower taxes.

What role does tax planning play in starting a new business?

For new businesses that are to be established in India, tax planning is crucial. This importance has increased as a result of the rising market competition and the effects of the pandemic. Tax planning for a new business aids business personnel and entrepreneurs in achieving their financial objectives. Not only must a business invest a significant sum of money in order to operate; it also needs to keep a positive cash flow.

Here are a few of the many advantages of tax planning for a new business:

Track expenditure

The most crucial aspect of planning is to keep track of the areas where you must invest and spend money. Through bookkeeping, you can keep track of this information, which will be useful for better cash flow management and tax savings.

Conduct inclusive research

Tax planning and savings are difficult to implement and involve a lot of complexity. Research on the taxation laws, regulations, and modifications is first needed, which will help you gain a lot of valuable knowledge! Any tax planning consultancy may also be of assistance for you.

Classify the business

The slab rates that are in effect for various categories of businesses are different in accordance with the Income Tax Act, 1961, of the Indian Government. You can successfully save on taxes by choosing from a variety of company registrations including a Private Limited Company, a Sole Proprietorship, and a One Person Company.

Dates for filing taxes

You can avoid late fees and increase tax savings for the business when you file your income tax returns or do GST filing in accordance with government regulations as per the due dates. In order to handle the taxation portion, you could contact professionals at Finaccle!

Office at home

Many entrepreneurs begin their business by using their house as a location of business. According to Sections 32 and 37 of the Income Tax Act, owners can claim deduction on the expenses that are related to office costing, utilizing bills, property laws, and mortgages.

The expanding Indian economy and the available manpower must pave the way for a new business’s incorporation to go smoothly. But if you want to successfully run a business, you should choose tax planning. It is difficult to outperform the competition and expand in the market as the market grows more competitive.

But, you need not worry! Finaccle offers you all kinds of assistance you will require for your business or company from financial services to accounting services to legal services and taxation related work! Contact us today and see your business become bigger and better! Stay tuned for more such insightful blog posts!

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!!