Accounting & Taxation

For the layman, there is always some confusion about why taxes are needed. Comparing your hard-earned income with the spending of government agencies, the thought can strike your mind that your contributions to the treasury are somewhat overestimated. However, when you give a deep thought about the payment’s purpose, it becomes clear why such a world order is mandatory.

History of Origin

In the last vicennial, many people accepted paying part of their annual income to replenish the treasury. Every county resident must understand why taxes are required and is obliged to periodically pay out a small amount for the development of education, medicine, and strengthening their defense force. History has taught us that a society is unable to function normally without a regular cash flow.

The valuable function of taxes is apparent, although not very pleasant for some residents. In the early days, at the expense of taxes, the crazy ideas to conquer the world were imagined. However, there were also positive countries in history, in which medical, education institutes were created, care for the general population was carried out, and orphanages were built.

For the normal functioning of state organizations, it needs a constant flow of funds. In addition, the more socially valuable policy is implemented, the more substantial the payment percentage of the treasury becomes. Why use the Online Income Tax Calculator when the officials can print the required amount of funds themselves? The answer to this question lies in the analogy of the comparison with the separate internal structure of the population. Let’s consider the utilities and housing sector.

Similar Payments

We will try to answer why the government needs taxes by considering an example of one multi-story building. In most cases, utility charges are paid monthly. Also, everyone is well accustomed to the need for such requirements and closely follows each receipt item. Money is paid for garbage collection, cleaning, heating supply, gardening, maintenance of the social structures, and communication in general conditions.

The absence of such payment mechanics threatens the life of apartment dwellers and also makes it hard to maintain the society premises. On the other hand, regular monthly payments allow people not to worry about such menial but necessary tasks and focus on more important things. So the government takes upon itself the primary concern of maintaining peace within the society while offering assistance to the weak and sick. The country’s external threats also make it necessary to maintain a substantial army to save its population from various opponents.

In all the countries, there are taxes, because the state can only function properly if they are available. Where do taxes go? It’s the job of the leadership (elected by a majority of votes) to distribute material resources evenly.

Statehood

In a developed country, residents understand where their taxes go. Each resident feels their effect on their everyday life by means of social needs, medicine, and education. The payment of taxes is fixed by revenue authorities. In addition, the constitution obliges everyone to pay taxes up to a specific amount annually and immediately in special cases.

The tax system works on the rules of prosecution if these requirements have been breached. Such responsibilities fall on a separate structure: the Central Board of Direct Taxes or tax office. The treasury is entirely owned by the citizens, which has entrusted its exclusive rights to the group of persons elected by the people’s mandate. While paying an obligatory amount, a citizen must look at it as payment of services provided by the government.

Currently, the modern tax system is as imperfect as it was before. There are various nuances of payment and their calculation method. The substantial amount depends on the living standard, the cost of goods and services, as well as the utility charges.

Obvious benefits of fee

The requirements for taxes and economic essence lie in the society’s development as a whole. The modernization process of older objects and structures is in full swing. Such a working mechanism should never stop because the essence of life is movement and change.

It is generally unclear why a citizen must pay taxes if he’s not receiving a dime from the state. The answer will be the same reason: thanks to conscientious residents, society exists. If people are evading this primary duty, this suggests that the supervisory authority – the tax officials – are not working well.

Whether people will not follow the legislative base – depends on every resident. The lack of participation in public life provides an image of an alienating power from the people. Nowadays, everything is in the hands of people. If they were not indifferent to the state’s fate, it would be impossible to evade responsibilities.

Change in Fees

Unfortunately, the economic model of every country is built depending on the laws of life: everything constantly changes and refuses to a standstill. This is the reason tax rates are being increased. Society is steadily developing, and every day someone needs to compensate for development. Buyers need to pay extra for everything, and, in turn, they are also required to cover the losses. The chain of the event is chaotically stretching across businesses, organizations and, as a result, finds its way into the government agencies.

The governments need to raise taxes unwantedly to equalize the cash flow balance. Such a complex process is developed by people themselves. Still, the general opinion is the same: “the state intentionally rips off the general population”. Misunderstanding arises from narrow thinking. If you consider the issue more generally, it becomes entirely clear why the government levies taxes.

Domestic Policy

To find out why and how much the government needs to collect taxes, it is necessary to consider what are the primary expenses of a government.

• Community and housing services (partially compensated from the budget).
• For proper functioning of the courts and government agencies: consumer protection, state employment services, social committees.
• Medical institutions: hospitals, clinics, nursing homes, sanatoriums.
• Educational institutions: schools, colleges, universities, research centers, academies.
• Cultural institutions: monuments, museums.
• Defence departments: police, secret services, army, prosecutor’s office.

There is also a more elaborate list of government expenses that are covered by taxes. Such things include helping in the event of natural disasters, assistance to neighboring countries, and foreign policy.

When someone starts a business or company that earns them a penny, the most important thing there is “recording of the incomings, outgoings, and savings.” It will give you a periodic update of where you spent, how much, and when. Considering this need, monk Luca Pacioli introduced a proper method of recording the incomes, expenses, assets, liabilities, and equities of an organization or business. These formats are named as financial statements of the body.

What is a Balance Sheet?

There are generally five financial statements. One of them is the balance sheet which is related to the assets, equity, and liabilities. A business is not just about how much is the profit earned. It is also about how much support a company has to pay off its loans and other liabilities because giving and taking credit makes a business thrive in the long run.

What is a Balance Sheet Made of?

The balance sheet has three general headings, and it is made according to the following formula:

Assets = Liabilities + Equity

Let’s get into this above-stated formula.

Assets

Assets are generally considered as something that a company owns in terms of material things of some value. Assets are divided into two different parts. They are current assets and non-current assets. 

Current assets are those assets that will benefit you or be turned into cash within twelve months of a year. However, non-current assets are those assets that can be converted into money after twelve months at any time. 

Equity 

Where the assets are related to the company, equity is related to the stakeholders of the company. Once all the assets are used to pay back the liabilities, the remaining assets become the company’s equity. Equity has to be distributed among the partners of the business in the form of dividends, as salaries are given to the employees. 

Liabilities

Liabilities are obligations in the name of the company that the company has to pay back. Like assets, liabilities are also divided into two categories: one is current liabilities, and the other is non-current liabilities. 

Current liabilities are those that have a maturity date of fewer than twelve months. It means they are to be paid back within the tenure of fewer than twelve months. 

However, the non-current liabilities have a maturity date of more than twelve months, i.e., they are supposed to be paid back after twelve months. They are also called long-term liabilities.

Explain the Importance of Balance Sheet

• The balance sheet has another official name called “statement of financial position,” which clearly indicates the purpose of the balance sheet. Any keen person would like to stay updated about the status and position of the company’s finances. Assets are supposed to be more than both liabilities and equities together because this is how you will know that your business is running as a going concern.
• Generally, if the amount of assets falls below the number of liabilities, it signals that your company is going toward bankruptcy. Most businessmen don’t even consider checking the balance sheets until it is too late to do so. In the end, they have to show the bank statements declaring themselves someone who is unable to pay back the liabilities. 
• You will get a deeper view of the relationships with your clients and your creditors through the balance sheet. It will show which debtor to write off and which creditor should be paid back first. 
• You will know about the declining capacity of your property, plant, and equipment. The assets are written after the accumulated depreciation amount is deducted from them. The net amount shows how much life your asset is left with. 
• You will have a better insight of the worth of your business. It will give you an idea of when to invest more and when to not. 
• The inventory of your business is shown in the balance sheet. The balance sheet will help you keep updated, so you are never under-stocked or over-stocked.
• Whenever you take a loan of heavier amounts, the financial institutions ask for any document that shows your finances’ health. In the case of a company, that document is the balance sheet. You need to show your balance sheet to ask for a loan. They review it to see your ability to pay back the loan amount within the decided period. 
• You will get a better understanding of how your business is running. Some businesses are more equity funded; Equity funding means most investments are made than loans taken by the company to thrive. Other companies are debt-funded, which means loans taken are more than the investments made. 
• A balance sheet is compared with previous years to measure the growth in the business. It is also compared with the balance sheets of other companies in the same industry. 
• Different investors prefer to see the balance sheet before investing, so it is obligatory to prepare them in the case of public companies. 
• A balance sheet can help you identify a lot of problems and solve them. It can help you see the hidden finances which are not letting the company make profits.
• It is easier for a tax officer to file a return when a proper balance sheet is maintained. You will be able to pay the correct amount of tax for your company. 
• Internal management prepares all the financial statements of the company. They will be able to identify the lacking areas themselves to promote the growth of the company. Hence, the effectiveness and the efficiency of the staff will be increased with this guide.
• Different financial ratios are calculated based on the amounts written on the balance sheet. These financial ratios provide you deep insights into each area of the business and the comparison with the averages of the industry.

Final Verdict

If you want to keep your business in a healthy state of profit, you need to keep yourself updated. You can only make yourself updated if a proper balance sheet is maintained. It is essential for any entity to understand the ongoings of the business, whether it is a small company. For all of this, the balance sheet plays a considerable role. 

All too frequently, the invoicing process is plagued with complications, ranging from inefficient manual processes to the possibility of human error. However, businesses may streamline this process and mitigate risk by using effective electronic invoicing or invoice automation technology. Continue reading this Upflow.io article dealing with past due invoices to learn the obstacles that come with invoicing, and how to optimize invoice management.

How Is The Invoicing Process Carried Out?

Before we discuss how to optimize invoice management, it’s necessary to define what we mean by the invoicing process. While the details vary per company, the manual invoicing process generally consists of the following steps:

A supplier issues a paper or digital invoice outlining the expenses associated with the goods or services delivered.

The invoice is then forwarded or assigned to the appropriate member of the accounts payable department for processing.

The invoice’s data is input manually into accounting software or filed in a paper invoicing system.

The invoice is manually approved internally to verify that it is relevant and accurate.

Payment to the provider is planned or paid promptly, bringing the invoicing process to a close.

That’s a lot of stages for what appears to be a very straightforward operation. When extended to the business level, the invoicing process consumes a significant amount of time and effort. Additionally, each stage of the process that requires human involvement is a potential point of failure. As a result, there are numerous considerations while attempting to optimize invoice management.

What Are The Difficulties Associated With Invoice Management?

For suppliers, in particular, the invoicing procedure is frequently fraught with difficulties. For one thing, mailing a paper invoice costs time and money, while sending an electronic invoice still carries the possibility of error and delay. Additionally, if an invoice is lost or delayed, suppliers may be forced to spend valuable time resolving issues or may even be forced to reprint the invoice.

Additionally, invoice processing offers some difficulties for the buyer. While entering a supplier’s invoice into an accounting or ERP system may appear to be a simple operation, it is frequently inefficient and labor-consuming in practice. Suppliers may send invoices via various channels, ranging from physical mail to PDF invoices sent via email, posing a variety of operational issues. And in many circumstances, manual data entry is employed to enter the required information into the buyer’s system — a time-consuming and prone to human error operation.

Switching to Invoice Management systems has helped many businesses in various ways, we have an example of Stencilgiant.com, the company switched to an invoice management system and it has saved on labor and made things easier.

How Do I Optimize Invoice Management

Fortunately, you can avoid many of these obstacles by setting out to optimize your internal invoicing process methodically and thoughtfully. The following are all strategies for increasing the efficiency and accuracy of your invoice processing, resulting in a more seamless, less manual, and error-proof invoicing process.

– Eliminate Paper

If you continue to use a paper-based manual invoicing method, going paperless by digitizing the entire invoicing process is the natural first step toward optimization. Without this stage, you will have minimal potential to streamline and optimize the process. There are essentially two ways to become completely paperless: either encourage your suppliers to migrate to electronic invoicing or develop your means of digitizing paper invoices via invoice scanning.

– Reduce Human Intervention

As excellent as your accounts payable department is, they are only human. And that means they’re prone to make errors, which is the polar opposite of what you want in an otherwise well-optimized invoicing process. 

Every stage of the conventional manual invoicing process requires human intervention, from the supplier sending the invoice to the buyer’s final payment. By automating each cycle, this input may be reduced, resulting in enhanced dependability and cost savings.

– Integrate Invoice Management With Your Enterprise Resource Planning System

Invoicing is only one aspect of daily company operations; it is connected to and connects with other processes such as cash forecasting and supplier management. As a result, there are frequent advantages to be gained by integrating your invoice processing system with any other processes managed within an ERP, creating a single platform for gaining operational intelligence and achieving cross-departmental efficiency.

– Establish And Monitor Key Performance Indicators

Finally, one of the simplest strategies for optimizing invoice processing is developing and tracking key performance indicators. KPIs will indicate the overall efficiency of the process and should also provide insight into which phases are falling short. By defining KPIs and then monitoring your invoicing process regularly to identify and rectify inefficiencies, you can steadily improve your system’s efficiency.

– Invoice Automation

That may seem like a lot to tackle at once. Still, you can achieve the majority of the value generated by improving the invoicing process with a single solution — invoice automation software.

By using an invoice automation solution, you may drastically eliminate manual input, significantly optimize invoice management accuracy, and link the invoicing process with the rest of your ERP effortlessly. And, perhaps most importantly, it does not necessitate significant changes in the behavior of your suppliers.

Historically, it has not been easy to develop a method capable of accomplishing this effectively. While traditional optical character recognition (OCR) can help automate invoice data capture, OCR is typically only successful when the correct information is in the precise right location in the invoice file. Manual intervention is frequently required to fix any inaccuracies.

Accounting plays a crucial role in running a business. It allows you to calculate the expenditure and profits for every financial year. Companies are also required to pay taxes to the government, and preparation and filing of the taxes is a time-consuming and complicated process.

If you plan to do it yourself, you will lose focus on revenue generation activities necessary for sustaining your business. The best solution to this issue is hiring expert accountants for your partnership firm.

Get All Your Deductions

Every business owner looks for ways to increase their deductions. However, due to a busy schedule, they cannot do much by the year-end or during tax season. The reason to increase deductions is it helps reduce taxes you have to pay to the government.

When you hire an accounting firm, the agency can identify potential deductions throughout the year. The accountancy firm will also advise you on strategic decisions for year-end deductions.

Many business owners forget to consider expenses like office space, out-of-pocket expenses, and depreciation while calculating deductions. Expert accountants will ensure all deductions are included in your tax filings, reducing your tax amount.

Prevent HMRC Audit

One of the primary reasons to hire an accountancy firm is to avoid an audit. Government agencies are known to conduct an audit when the deductions to income ratio are high. If you have shown excessive deduction in the tax filing form, a government agency like the HM Revenue and Customs may call or write to tell what they want to check.

Many business owners think any problem in an audit can be fixed later. The truth is if HMRC officials find your firm does severe or extensive tax evasion, they might open a criminal investigation. You can avoid this by hiring an accountant firm.

The primary reason for HMRC audits is that the business owner makes too many mistakes in the forms or too many charitable and excessive write-offs. The guidance of the accountant can help you avoid things that will raise any suspicion of tax evasion.

Also, the accountant will ensure the tax forms are correctly filled and there are enough supporting documents to support the deductions mentioned.

Save Time and Energy

Many entrepreneurs hiring an accountant means additional expenditure and might not be able to afford the fees of their services. The truth is accountants charge a reasonable fee to their clients, and their service is real value for money. Accountants can help ensure accurate tax filing and help you get tax refunds that you are eligible for.

Also, many businesses suffer financial losses due to inaccurate reporting or poor financial decisions. An accounting firm will provide you with the right advice in taxation, and you will be free to focus on core business tasks.

Make Real-Time Decisions

When a business grows, entrepreneurs must make decisions like hiring more employees or expanding their operations. However, they fear making decisions to support growth as they worry about the potential consequences and implications of taking such decisions.

An accounting firm can help you budget and monitor the cash flow and help you make the right decisions depending on the latest data.

To sum up, these are some reasons to hire expert accountants for a partnership firm.

All the efforts you spend treating patients wouldn’t keep your business afloat if you fail to get paid for the services rendered. That’s the reason many healthcare businesses are facing economic downfalls. There is a huge gap between medical billing expectations vs. reality.

For instance, you can witness an enormous difference between the customer expectations and the reality of services a billing agency provides. Your medical business needs a reliable billing partner who understands your requirements just as your patients require the best services from you. Professional medical billing companies address your concerns and fulfill your demands according to your expectations. 

However, there are some misconceptions associated with outsourcing that tend to be harmful as they portray a bad practice in the market. For many medical facilities, it could be difficult to gain trust and allow someone to handle medical billing and coding on their behalf_ especially if they had a very bad experience in the past.

It’s important to understand the difference between medical billing expectations vs. reality, uncovering the truth behind them to improve the profitability, productivity, and efficiency of your healthcare business. So, what should you expect from an outsourced billing expert?

Medical billing specialists offer customized RCM services to streamline your workflow and reduce your workload. They are well-versed in utilizing the latest technology and always stay updated with the growing and changing government regulations.

Before further discussions, let it be clear that, no matter whether or not you outsource your medical billing services. You have some responsibilities too. For instance, you must have a complete understanding that the success of your practice depends on many things such as:

• Accurate medical billing and coding.
• Clean claim submission.
• Streamline revenue cycle management.
• Optimize A/R recovery services.

Once your billing procedure gets optimized it can significantly lower down your economical pressures and advance you to brighter opportunities.

Medical Billing Expectations vs. Reality

Less Control Over Business

Many medical professionals thought that by outsourcing they could lose control over their business. But it’s not reality. Outsourced billing companies provide you assistance for a particular practice procedure. They have the right personnel having the best knowledge to handle your billing and coding efficiency.

They provide reliable services for managing billing tasks and boosting revenue streams. Furthermore, the outsourced billing specialists not only look over your medical billing but also optimize the whole process of revenue cycle management.

Billing experts help you save time to stick to a realistic budget and focus on your core objectives too. You can also enjoy the advantages of outsourcing your medical billing services to an agency that understands how to work or how to make your business successful?

Some of the major benefits are;

Act as an Extension

Find the best medical billing agency that meets your expectations and cares about your business growth. Billing professionals act as an extension to your business. They drive you to the right way so you may enjoy the highest financial success.

At this point, you can see how outsourced billing specialists address your pain points and provide solutions accordingly. They provide customized medical billing solutions that best fit the financial needs of your healthcare business.

With the right partner, you can gain full control over your practice and this will also positively impact your business.

Prevent Revenue Backlogs

Do your practices work on regular operating hours? It would be advantageous if you outsource your medical billing & coding services. The efficient billing teams provide effective strategies and help you capture accurate data to update patient claims efficiently.

This helps your team to work at a consistent pace throughout the day and also prevents revenue backlogs. In this way, they reduce the chances of costly billing/coding errors, prevent denials, and help you recover payments significantly.

Ability to Upgrade

Contrary to medical billing expectations vs. reality, outsourcing provides you complete control to keep a better track of your revenue cycle. Billing specialists will truly expand your business to new horizons.

Cut Operational Expenses

The most compelling reason to outsource your medical billing services is the reduction in operating costs. Spending extra costs to recruit, train, and hire new staff to get the billing procedures done on time can impact your budget drastically.

Reliable medical billing companies eliminate all these expenses. They have trained teams that help you streamline your revenue cycle management effectively.

Therefore, practitioners can save a lot of their costs and avoid making major investments like installation of billing software, infrastructure, maintenance, upgrading, etc. Without having to hire full-time employees, getting the assistance of medical billing experts can enhance your business proficiency.

Moreover, outsourcing can allow you to better manage your time and focus on the core competencies of your business respectively. Besides, with a trusted partnership, you’ll be amazed by how much more profitable your practice will be and what you will save.

Lacking Industry Experience

The most crucial and most abundant aspect that can be considered is that the practices that outsource are inherently lacking in knowledge in some way. When you outsource, you get help from certified billers and coders who have vast industry experience and in-depth knowledge.

They stay up-to-date with the billing industry regulations that keep changing and help you keep up with the innovations. In addition to this, they help you make use of the latest technology and integrate EHR/EMR systems to automate the entire billing cycle.

Thereby, they help you submit faster, error-free claims electronically. In addition to this, a skilled medical biller helps you keep track of your finances by providing regular financial reporting and analytics.

Conclusion

Hence, outsourcing medical billing services bridge the gap between medical billing expectations vs. reality. The certified billing experts are committed to providing extraordinary and compliant services to their clients.

If you are considering starting an investment path with commercial real estate (CRE), you should know that there is software designed to help you with every part of the process. CRE software, when top-quality, is all-in-one. From giving your data and important information (and documents) a safe place, to helping you walk through the steps of a loan. CRE software is a necessity if you want to get into the real estate scene.

About CRE Risks

Now, we would be remiss to not speak about the risks associated with CRE. Before you begin the dive into the area, you should consider looking into real estate notes and the risks of it. The short version is that there are different types of risks that should be considered before getting into a property. There are generally three types of risks, each of which will be spoken about here, and the rule of thumb here, is that the return you get from your investments will be proportional to the amount of risk you take. Risk more, get more. And luckily, with the help of a good CRE software, the risks diminish greatly. So, despite the risks, investing in CRE is a viable and great way to grow wealth.

Credit Risks & CRE Software

This is the risk that is associated directly to the borrower’s credit on a note. Basically, you will need to calculate and assess the borrower’s ability to make payments, and the likelihood of that happening. Most of this risk is foggy since nothing is really in cement until post-investment. The risk involves the borrower’s credit score, their income, and their property income. Every note carries some sort of credit risk with it, since nothing is ever for sure in this life.

CRE software will help you assess the credit risks and choose if the borrower is a good match for you. You can set your own, custom rules for what you consider to be credit consistency, and that will help you filter out the possible people to invest your time and money with. Doing it like this, eliminates most of the risk, and will help you to make your CRE more profitable.

Collateral Risks & CRE Software

Collateral risks are, really, for you more than the borrower. That is, the risk assesses whether or not you can use the money of the property as a liquid asset to pay back whatever investments that need repayment. So, it is the ability for the property, once sold, to return your entire investment in a worst-case scenario like a foreclosure. This is important to keep tabs on because your property acts as a liquid value, and if your borrowers destroy it, that value lowers.

CRE software helps you here by giving you consistent access to every part of your collateral considerations. From being able to review your commitments, to drafting and figuring out loan paperwork, and giving you tools to be a better manager to keep that property value high—CRE software helps you holistically with every part of the process.

Investment Risks & CRE Software

Every investment is different, so there is no way to give one situation and then a solution for it using CRE software, like the past two. Instead, what needs to be known about these risks is that there are many possibilities, and they all work like terms and conditions. Most of the time, these risks come from terms reaching their maturity, interest rates changing, late payments or defaulting clauses in the agreements, payment histories, and loan-to-value or invest-to-value on a property. All of these are risks because they impact you and your ability to do future investments when they go wrong (or right!).

 CRE software can also function as a commercial loan software. Your entire investment is essentially a loan broken up into fragments. The software will help you by keeping all of the contracts and loans and essential information that you need, in one place. Further, it will help you to benefit with profits by letting you understand more about the things you have agreed to, and the things that everyone else has agreed to too.

Things to Keep in Mind

Many people approach CRE as the Wild-West. They want to pick up as much property as they can, ‘flip it’, and then spit it backout at the nearest, highest, bidder. This works well for short durations but can work out poorly for long term investments. You don’t want to be churning through so many houses that work is not completed, or it is poorly done. Further, there are a lot of other risks which come from a CRE; a significant number of them can be solved using the correct CRE software.

Tax planning is an essential aspect of every business, both big and small. However, when you want to expand your business, it becomes necessary to plan your taxes properly. Taxes can take up a considerable chunk of your investment returns, and only through strategic planning can you save this substantial amount. When you are a small business, any savings are helpful as you can invest the money in other ventures or just improve your business.

Tax planning for small business is much more than managing your investment and affects every single aspect of your business, from salaries to income sources, expenditure, and financial decisions. It is bout analyzing your financial profile and creating a strategy to minimize your tax liabilities.

Many tax-saving benefits are legally available to small businesses. Consider the following points while planning your taxes.

Figure Out What Tax Deductions Your Business Qualifies For

You can deduct 20% of qualified business income while calculating your federal taxes under the Qualified Business Income (QBI) deduction in the Tax Cuts and Jobs Act (TCJA). But you qualify for this only when your business is a pass-through entity, a sole proprietorship, a partnership, or an S corporation. Ask a professional to help you determine the best classification for your business.

Take General Business Credits

With tax credits, the federal government encourages businesses and individuals to adopt certain policies that promote a larger good. For example, you can qualify for tax credits for going green, providing health coverage for employees, or promoting employment to the disabled. All these tax credits come under General Business Credit. It can help you lower your taxable income and save money.

Benefit on Deductions For Equipment

Section 179 deduction is a great thing as you can take deductions for the equipment or property you’re using as a service. You can get a federal tax deduction of an amount up to $1.04 million if you buy equipment and place it in service before the year-end.

In addition, you can take up to a 100 percent bonus deduction on specific equipment bought and put in use after Sept. 27, 2017. You can use this deduction to save money on your business tax return.

Set Up A Retirement Plan

You can save money by setting up a retirement plan for yourself and your employees.  Any contribution you make to these plans is tax-deductible. Besides, you can also get a tax credit to pay for certain retirement plans.

There are several retirement saving plans that can help get valuable tax benefits, including SEP-IRA, SIMPLE IRA, 401(k), and other profit-sharing plans. But remember, some plans need to be established before this year to get the tax deductions in 2022.

Understand Taxation On PPP Loans

The Paycheck Protection Program (PPP) enables you to cover employee salaries and other expenses through small business loans. In addition, under certain conditions, these loans can be forgiven too. Forgiven loans are not taxable, but the complete tax picture can be more complicated. The IRS states that deductible expenses like payroll costs are not tax-deductible if they are funded with PPP loan proceeds.

The sooner you plan your taxes for the year, the better prepared you’ll be to prevent any cash flow disruptions. With proper planning, you can distribute the tax burden throughout the year. So, instead of looking for full tax payment at the end of the year, you can pay off the estimated taxes to the IRS. This will help you avoid any penalties later.

Besides, you can delay the billing for work done and write off bad debts to lower your tax liability in the current year. So, practicing early tax planning for small businesses can reduce your taxable income and help keep more of your money in hand. This will enable future investment or expansion decisions.