Paving way to better conservation of funds and resources for an organization, tax reduction strategies for small business can be a tricky affair. According to a survey by the Economic Times, SMEs occupy more than 40 percent labor force of the total Indian market along with more than 42 million businesses categorized beneath it. Recently Govt. of India reframed the tax rate of 25 percent for the businesses with turnovers around 400 crores which was earlier implemented for the businesses with turnovers of 250 crores. Apart from all the economical aids including the loan facilities bestowed by the public and private finance sectors, most of the business leaders of SMEs are interested to discover new and innovative tax-free ways to extract income from business. With the ‘Make in India’ initiative small businesses are mushrooming significantly in India and for their sustenance in the market tax relief for SMEs needs more attention.
The article represents some efficient tax-saving tips for owners of small businesses which will strengthen their grip over the taxation of SMEs. Saving from Income taxes, employment taxes, sales taxes, and excise taxes, these tax-saving tips for small business owners, can reduce the tax-related burdens on SMEs significantly and thus flourish their business exponentially.
- Track your Spending: It is always a good idea to follow the spending and expenses through a financial year. Going through the spending track record you can plan a better business strategy for the coming year and invest accordingly. As lots of software available in the market keeping the track of expenses is much easier now than earlier.
- File Tax on Time: Filing tax on time will save you from fines or any kind of penalties. Try to file taxes through the efficient software platforms available in the market which will not maintain the accuracy of your filings but will ensure maximum refunds without any hurdles.
- Maintain Records: Opt for a computer-based record keeping as it will automate the business. You can store the receipts other evidence of expenses in it as well. By enabling the growth of business it will ensure no loss of data which may happen sometimes due to traditional record-keeping methods.
- Opt for Health Insurance and a Retirement Plan: Planning for the retirement and health insurance will also aid in tax saving as money will be getting deducted beforehand as per the desired plan. Also, plan the health expenses beforehand as medical costs are rising and opting for health insurance can give you an opportunity for financial savings.
- Provide Benefits to Employees: It is also beneficial to plan for the retirements of the employees working under you as well, as it will increase their work efficiency and dedication towards you. Instead of raising the salaries of the employees to grant them extra bonuses and other remunerations.
- Hire Contractual Employees: If possible hire the workforce which can work for you on a contractual basis. By employing independent contractual employees you don’t have to pay any taxes and fines on behalf of them which can save the company a lot of extra funds.
- Look for Professional Help: Seeking out the help of professionals who hold proficiency in this field can introduce you to new and innovative ways of tax saving that you might not know previously. A certified tax attorney will go through your plans and strategies and advise you accordingly.
It is not likely to learn and adapt every possible plan in your management strategies to save those extra funds. Some tricks and techniques you will learn over time. You might find some alternatives that you might not have known earlier. Learning and implementing the strategies will certainly keep you ahead in the curve.