Tax Hacks: 5 Ways to Manage Liabilities and Boost Cash Flow

The right business tax planning strategies can make the most of your upcoming tax season.?

When you manage tax liabilities properly, you not only increase your savings but also ensure legal compliance and minimize the risk of costly penalties.??

With the right approach, you can transform your tax season from a stressful burden into a proactive, strategic process that supports your long-term growth.?

Here are 5 strategies you can implement to manage your liabilities, reduce your yearly tax bill, and position your small business for success in the coming year.?

Maximize Deductions?

Deducting business expenses is a great way to reduce income and it all starts with keeping a record of these expenses. By tracking every cost—whether it’s for office supplies, equipment, or travel—you’ll ensure that you're maximizing your deductions and staying compliant with tax laws.?

Here are a few common expenses businesses can deduct:??

Office Supplies and Equipment: Items such as computers, printers, or office furniture are eligible for deduction. Even the cost of office supplies (paper, pens, printer ink) can also be deducted.?

Home Office Deduction: The IRS allows you a deduction if you run a business from your home. You can deduct a portion of your rent or mortgage, utilities, and other home expenses based on the size of your office compared to the rest of the home.?

Vehicle Expenses: Vehicles used for business purposes are also a great way to deduct expenses. You can either deduct expenses like gas or insurance, or you can use the standard mileage rate set by the IRS.?

Travel: Travel costs related to business can also be deducted. This can range from airfare to hotel stays to meals. The IRS requires these expenses be necessary and directly related to business purposes.?

Keep records of these expenses so you can optimize your savings.???

Know Tax Credits?

The IRS provides several tax credits available for small business owners. Tax credits allow you to take the amount of tax income you owe and subtract the amount of the credit, reducing the overall tax payment.?

Some of the tax credits for which business owners often qualify include:?

• Small Business Health Care Tax Credit: If you pay health insurance premiums for yourself or for employees, you may qualify for a tax credit equal to a significant portion of your premium costs.?

• Work Opportunity Tax Credit: If you hire and employ individuals from certain groups, you may qualify for a tax credit.?

• Disabled Access Credit: If your business incurs expenses for the purpose of providing access to people with disabilities, you may qualify for a tax credit of up to $5,000.?

• Charitable Contribution Credit: If your business donates to a nonprofit organization or sponsors a charitable event, you may qualify for a tax credit equal to at least 50% of your charitable gift.?

Choose the Right Structure?

Is your small business operating as a C corporation or an S corporation? Structure might be something you need to reconsider for your small business. Each corporation comes with its own benefits and setbacks depending on the circumstances.??

Here are a few key differences you can consider before you decide if you need a C corporation or an S corporation:??

• The main advantage of a C corporation is that it allows different stock classes, enabling the business to raise capital. But if your business doesn’t need to raise capital, this may just be increasing your tax liability without providing tangible benefits.?

• As a C corporation, your business pays its own income tax while you separately pay personal income tax based on your compensation. Alternatively, S corporations don’t pay corporate income tax. They instead pass on business revenue as personal income to the owner(s).?

• A C corporation with $1 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) would pay 21%—the current corporate income tax rate—before distributing dividends, salaries or bonuses. An S corporation, on the other hand, would not need to pay that rate.??

• For personal assets, you might be able to achieve the same protection no matter if you have a C corporation or an S corporation.??

Additionally, if you have an S corporation, you are eligible to claim a qualified business income deduction. In fact, with an S corporation, you may be able to reduce your tax liability overall. Find out what best suits you and your small business.??

Keep Track of Losses?

Small business owners can carry over certain losses to future years, known as a net operating loss (NOL) carryforward. If your business incurs a loss in one year, you may be able to apply that loss to offset taxable income in future years. This can be valuable for businesses that experience uneven earnings year-to-year.?

The same goes for unused tax credits or deductions, as well. Just be sure to carry these over to future years as allowed by law.??

Use Depreciation?

This is a powerful tool that allows business owners to deduct the cost of significant assets, such as equipment, vehicles, or buildings. The IRS offers several methods, including Section 179 and Bonus Depreciation. Under Section 179, you can deduct the full purchase price of qualifying equipment in the year it is purchased, rather than spreading the deduction over several years.?

This strategy is great for small businesses that regularly invest in new equipment or machinery that can depreciate overtime.?

About BBB?

Better Business Bureau (BBB) is a non-profit dedicated to promoting trust in the marketplace. Since 1912, it has established ethical standards for businesses and monitors compliance. BBB aids consumers through information provision, dispute resolution, and scam alerts, fostering a fair and trustworthy marketplace.?

Like what you see? Join a trusted network of businesses that over 140 million visitors use and trust. Become BBB Accredited and get access to customer reviews, free advertising, and resources such as small business tips, advertising my business tips, and more.??

Head to BBB.org to for more business resources today!??