Establishing and running an enterprise requires proper planning and sheer determination. A lot of factors such as powerful decision-making, efficient production, great marketing, quality customer service, etc. contribute to the success of a business. The profitability of a business is determined by its generated revenue and therefore, the last thing any entrepreneur would want to do is to pay a significant portion of the business income as taxes. However, there are several ways through which businesses can reduce taxes for their own profit. So, if you are a small business owner, you can consider the following tax saving options to reduce your tax liability.
Write off preliminary expenses
- While establishing a business, you will have to take care of certain preliminary expenses. These preliminary or start-up expenses come under capital expenditure for establishing a new venture. Section 35D of the Income Tax Act allows you to write off initial costs as a deduction, in five equal installments, over the first five years.
- Since establishing a business requires a large amount of capital, you can consider a small business loan for the same. Bajaj Finserv business loan available at Finserv MARKETS offers competitive interest rates and various other attractive features.
The Income Tax Act enables small businesses to claim deductions on expenses entailed while running the company. Therefore, you can reduce your tax burden by availing appropriate tax deductions on all your business expenses. However, you must record all your business transactions and expenditures diligently and systematically in order to avail these small business tax benefits.
Use fringe benefit plans for employees
By paying for certain fringe benefits for your employees, you can save a large amount on the business taxes. Some of the tax-exempt benefits that you can consider offering your employees are mentioned below:
- Health benefits
- Long-term care insurance
- Group term life insurance
- Disability insurance
- Educational assistance
- Dependent care assistance
- Transportation benefits
- Meals provided for employee convenience
Avoid penalty for late filing
In India, there are specific deadlines when it comes to tax filing. Therefore, as a responsible entrepreneur, you should always submit your tax returns before the due date. If you fail to do so, you may have to bear the penalty charges. Therefore, it is essential that you always file your income tax returns on time and utilize your capital wisely.
Make a retirement plan
It is always recommended to formulate a retirement plan well in advance to ensure a comfortable future. Relying completely on your business as your repayment strategy may not be a wise decision. Therefore, you should always set aside some income regularly in a retirement account. This can also help in reducing the tax burden significantly.
Now that you are well aware of various options of tax savings for small business, ensure to make the most of it, to make your business more profitable.
A large number of entrepreneurs avail small business loans and MSME loans. It is to be noted that tax benefits can be availed on such loans. The interest on business finance is tax-deductible. Therefore, it is always advisable to make a note of the business loan interest rate while applying for a business loan. With the help of an online business loan EMI calculator, you can calculate the monthly installments beforehand. This will allow you to plan your monthly budget wisely.
Lastly, do not forget to read the terms and conditions of the loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.
On Finserv MARKETS, you can avail a Bajaj Finserv Business Loan that is customized to meet the special needs of your business. Avail collateral-free small business loans for up to Rs 30 lakh with minimal documentation and fast approval.
Read more on benefits of taking a small business loan only at Finserv MARKETS.
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