For a small business owner, taxes can be stressful. You probably wear multiple hats, so giving the government more of your hard-earned business money is the last thing you want to do.

Fortunately, there are a number of tax-saving strategies you can use as a business owner to reduce your taxable liability. If you want to decrease your taxable income this year, take a look at some of the strategies listed below.

1Working with family members

Hiring a family member is one of the finest strategies to save taxes for your small business. There are many choices available through the Internal Revenue Service (IRS), all of which have the potential to shield income from taxes. Even your children are employable.

As a result of hiring family members, "small business owners are able to pay a lower marginal rate, or eliminate the tax on the income paid to their children," claims Scott Goble, a certified public accountant (CPA) and the founder of Sound Accounting.

For instance, sole proprietorships are exempt from social security and Medicare taxes on a child's salary as well as the Federal Unemployment Tax Act (FUTA) tax.

It is imperative to emphasize that profits must support legal business objectives. The IRS additionally offers small business owners the perk of reducing their taxes by allowing them to hire a spouse who is not subject to the FUTA tax. Depending on the benefits they might receive from a different job, you might also be able to set aside money for their retirement.

2Launch a retirement plan

You miss out on an employer-matched 401(k) match if you own a small business. However, there are several retirement account options that boost retirement savings and reap significant tax benefits. For instance, the IRS allows you to contribute a total of $57,000 to a single-participant 401(k) plan in order to save for retirement. These tools for retirement planning include:

● Plan for Simplified Employee Pensions (SEP)

● Roth IRA or an IRA

● Plans 403(b)

The IRS website offers a number of retirement plan options for business owners as a tax-saving measure.

3Save money for medical expenses

Saving money for medical expenses is one of the best methods to lower small business taxes. Even if you are currently in good health, it is still important to save money in case you have unanticipated or future medical demands. If you have a high-deductible health plan that qualifies, you can achieve this through an HSA.

"I also urge every company owner to consider using an HSA. "Many businesses seek to reduce the cost of health insurance as medical costs rise," "says Smart Wealth Advisory's Sean Moore, a CFP and ChFC. "Employers and employees can both save on taxes and possibly associated medical expenses by using HSAs.

According to Moore, the triple tax advantage is a strategy for saving money that combines three key elements: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualifying medical expenses.

4Change Your Business Structure

You do not have the benefit of having your employer deduct a portion of your taxes as a small business owner. The full amount of Social Security and Medicare taxes is your responsibility. You still have to pay such taxes if your company is taxed as a limited liability company (LLC), but in some cases you might be able to forgo the employer-half of those two tax obligations.

This could be a wise change for some small businesses. It can be a great way to reduce your tax obligation, but there are a lot of things to consider when making this choice, such as paying yourself a fair compensation and any additional risks.

5Deduct your travel costs

There may be ways to lower your business taxes if you travel frequently. While personal travel does not have the same benefit, business travel is completely deductible. To maximise their business trip, small business owners can combine personal travel with a legitimate business objective. Any frequent flyer miles accrued while on business trips can also be later redeemed for personal travel.

Conclusion

As a small business owner, you can keep more of your money in your pocket by using smart planning to lower your taxable income. Just keep in mind to speak with a tax expert to confirm that you are eligible for the potential savings mentioned here.