As a small-business owner, tax season can feel overwhelming, to say the least. However, with the right strategies, you can turn tax time into a chance to boost your bottom line.
Find Out: The Best Tax Deductions and Tax Breaks for 2024-2025
Learn More: 8 Common Mistakes Retirees Make With Their Social Security Checks
GOBankingRates spoke with small-business owners who shared their best tax tricks to help you maximize your refund this year.
“As a small-business owner, one of the most effective ways to lower your taxable income and maximize your refund is by taking advantage of the Internal Revenue Service’s Section 179 deduction,” explained Thomas J. Brock, CFA, CPA, an expert for RetireGuide. “This aspect of the tax code allows you to deduct the full purchase price of tangible property, such as machinery and equipment purchased for use in a trade or business, in the year of purchase rather than depreciating it over time.”
If you’ve invested in essential business equipment during the tax year, this could mean huge savings.
Read Next: 6 Reasons Your Tax Refund Will Be Higher in 2025
If you work from home, don’t overlook this valuable deduction. “Generally, to claim this valuable tax break, you must exclusively and regularly use part of your residence as your primary place of business,” Brock said.
He also shared that, per the IRS, taxpayers who qualify for the home office deduction can choose one of the following two methods to calculate the allowance.
“The regular method allows direct expenses to be deducted in full. Indirect expenses, such as mortgage interest, property taxes, utilities and homeowners insurance, are based on the percentage of the residence devoted to business use,” he said. Alternatively, there is a simplified option in which $5 per square foot of the home used for business purposes is deducted, for a maximum of 300 square feet.
According to Jonah M., owner of a script consulting business, there’s a big difference between someone who simply files your taxes and someone who helps you strategize.
“I made the switch from using a traditional CPA to working with a dedicated tax strategist three years ago, and it’s saved me thousands annually,” he said.
A good tax strategist doesn’t just look at what happened last year but helps you plan for the coming years to minimize your tax burden legally and effectively.
Small-business owners have access to powerful retirement savings options, like SEP IRAs, SIMPLE IRAs and solo 401(k) plans, that offer higher contribution limits than traditional employee plans.
link