How Businesses Can Reduce Taxes

Without taxes, there will be no money for providing public amenities and government services and building infrastructure. Both small to medium enterprises (SMEs) and large companies are required by law to pay them. However, the law does not state exactly how much you should pay.


 There are a lot of ways you can reduce your business tax without breaking the law. Here are some of those:

  • Use Contractual Employees Instead of In-house Ones

 This is one of the best ways to reduce taxes. Whenever you hire an employee, he or she is required to file with the tax bureau. However, if he or she is not an in-house employee and is just a contractual or independent worker, then he or she does not need to do it. This is a benefit commonly enjoyed by outsourced employees or freelance workers who work on a per project basis or on a per time period basis.

  • Record Personal Expenses as Business Expenses

 This is something that many business owners do in order to avoid paying high taxes. Taxes are based on the net profit accumulated by a business, so when you charge your car or travel expenses to your business, you will be able to deduct a considerable amount off your tax. You may also charge some utility expenses, like the cell phone bill, as part of company expenses so that you don’t need to pay too much.

  • Provide Employees with More Benefits Instead of Higher Pay

 Whenever you increase the pay of your employee, you have to pay higher taxes. This is bad for both you and your employee since your employee will get less of his or her salary, and you have to pay more in taxes. The best way to go about it would be to offer more employee benefits since these are not taxable. By doing this, your employees will have a more secure insurance without having to pay more taxes and your company can save on its overall tax expenses.

  • Record Your Insurance Expenses Under Your Company

 Since insurance premiums are also not taxable, then you may record your personal insurance expenses under your company. Although your personal insurance expenses are under your name, you may opt to put it under the company name instead and just take the benefits from it. That way, you increase the amount of expenses your company has, and you pay less taxes.

Taxes can take up an extremely big chunk of a business’s total revenue. However, with proper tax planning, you will be able to come up with ways on how to avoid certain fees and to deduct a small amount from what you originally have to pay. In other words, it allows you to prepare strategies on how you can save on taxes. In countries like Cyprus, tax planning is done very meticulously. In fact, Cyprus has a lot of firms that would offer services on saving taxes for business.

If you’re one of those businessmen who are keen on saving, then tax planning might be exactly what you need.