Posted on Aug 23rd 2023
With more than 6,800 pages of US tax code, it can be hard to decipher whether your small business qualifies for a tax refund. It’s complicated. It’s a headache. It’s something that makes you grimace each year.
But, if you end up with a nice tax return when you’re finished, it’s a great chance to invest in your business, your employees and your future.
Which types of businesses qualify for a tax refund? It depends on how you’re classified. A sole proprietor and a partnership will be combined with your personal tax return. LLCs, meanwhile, can be considered a sole proprietorship, partnership or an S Corporation. If you own a C Corporation, your business pays taxes on the business’ income, and you pay the dividends on your taxes.
Sounds confusing? It is. That’s why hiring a professional like Paramount can save you a headache, find deductions you wouldn’t on your own, and ensure that your taxes are filed accurately.
If you qualified for a hefty tax return, congratulations! Now that the money is in the bank, you need to find a smart way to use it.
Few things are guaranteed when it comes to running your own business. So, when you get an influx of cash through a tax return, there are two options — save it, or spend it.
It’s always nice to have a rainy day fund tucked away. But if you have debt, this could be an excellent opportunity to reduce it. Paying off more debt now means you’ll have less interest later. It can also boost your credit score, which makes it easier and cheaper to take out a loan in the future.
There are other ways to invest in your business. Think about how you would spend a personal tax return. A vacation? Turn that into a networking trip to an industry conference. Pick up a new hobby? Try enrolling in classes to earn a new certification. What about home repairs? Your storefront could use some fresh paint. Uncover the possibilities by sitting down and considering your priorities.
Sometimes, recruiting and retaining good employees can seem like a full-time job. Using a tax return to increase pay or give an unexpected bonus is a way to improve morale and gain loyalty.
There are other options to use your return to show your appreciation. How about adding it to retirement accounts? Or, if your return is small, try spending it on a bonding activity.
Listening to your employees can give you more ideas. Try bringing your office together for a charity run or ride. That tax return can then go toward a good cause — and add more purpose to the workplace.
A business tax return could be your chance to relieve some of those minor inconveniences around the office. For example, you could finally replace the printer that seems to break daily. Small stressors like an unreliable printer can lead to frustrations in the workplace. While something like a new printer might not usually be in the budget, it’s still a way to use your return to lead to a smoother operation.
Other improvements you can consider include a smoother payroll system, a new register or fresh computers. Every industry relies on technologies — what technologies can your business benefit from?
Need more ideas? Consider an ad campaign to bring in new business. If you’re uncertain if next year’s return will be enough to cover a new expense, contact Paramount to start planning for your financial future.
Knowing how much the government owes you doesn’t have to be a mystery. Paramount will walk you through your situation and help you uncover more tax incentives. Taxes aren’t straightforward. There is the self-employment tax, the state franchise tax, the payroll tax and the sales tax. And don’t forget property taxes. Not all of these will apply to you, but missing one can have serious financial consequences.
Fortunately, there are many opportunities to find small business tax breaks. Items like rent, utilities, meals and even office supplies can be deducted. You can even expense up to $1 million in equipment and $2.7 million in property. However, these numbers can also change from year to year.
You don’t have to do it alone. It’s important to know when you need an expert, and taxes are one of those areas. Paramount not only takes the guesswork out of it but can help you plan for the future so that you know what your tax return might be. That way, you can start planning on how to use it even earlier. Contact us today to get started!