5 Ways to Lower Your Small Business Taxes

Don't pay the IRS more than you have to.

Whether you're a salaried employee or a small business owner, your goal may be to pay the IRS as little money in taxes as possible. But if you're in the latter group and are new to small business ownership, you may not be aware of all of the options you have. Here are a few steps you can take to lower your small business tax burden -- and retain more money that you can use to grow your venture.

1. Keep solid records

Maintaining a solid ledger is one of the most important steps you can take on the road to lowering your small business taxes. Having clear records will make it easier for you to identify tax write-offs and other savings opportunities.

2. Contribute to a retirement plan -- for yourself and your employees

Pumping money into a tax-advantaged retirement plan is a great way to shield some of your small business income from taxes. One such plan you may want to consider is a SEP IRA, which is an IRA for self-employed individuals and small businesses. You can also look at a SIMPLE IRA, which falls into the same category. An accountant can help you wade through your small business retirement plan options and see which one is the best fit for you and your employees.

3. Know how to depreciate business equipment

You might purchase different types of equipment you need to keep your business running. That might include machinery, computers, and other assets that can eventually succumb to wear and tear and lose value.

Recognizing that such assets don't last forever, the IRS allows small business owners to depreciate business equipment on their taxes and snag a tax break in the process. There are different depreciation methods you can use, though, so it's best to consult an accountant and see what they think makes the most sense.

4. Know what interest you're allowed to deduct

You may have run up a tab on a small business credit card you're now paying off over time. Or maybe you took out a small business loan to finance some equipment or cover other startup costs. The interest you're paying on those debts may be tax-deductible, so it's a good idea to talk to an accountant and see what options you have.

5. Hire the right accountant

Notice how "talk to your accountant" has been a common theme here? The reality is that you might save yourself a nice amount of money on small business taxes by virtue of hiring the right person to advise you on them. Rather than engage the services of the least expensive accountant out there, find someone who's savvy and up to date on different rules as they pertain to small businesses. You may even want to talk to fellow business owners and get their recommendations.

There's no sense in paying the IRS a dollar more than you have to. Use these tips to slash your small business tax bill -- and keep more of your hard-earned profits for yourself.