Every business has the opportunity to take advantage of tax breaks on both the federal and state levels, but navigating the specific incentives can be challenging and time-consuming. These tips may help you identify and leverage more of the tax-saving opportunities available to your business.

1. Think about your taxes year-round

Karla Dennis, CEO and founder of Cohesive, suggests business owners work on their taxes all year round—not just during tax season. “January through April is what we call tax compliant season. That’s when your tax professional is putting together your tax return—dotting the i’s and crossing the t’s. May through December is an opportunity to really plan out your tax bill. Many people mistakenly think that your taxes are your taxes, and there’s nothing you can do about them, but there’s a lot you can do to reduce your tax bill,” she explains.  Keeping detailed records of income and expenditures, understanding the deductions to which your business is entitled, and making note of the following tips can help you ensure you’re not paying a larger tax bill than necessary.

2. Evaluate how your business is organized

“When was the last time you evaluated the entity you were operating from? Most of us create our entities and never go back to see if this is the best way to be running our business today,” says Dennis. Restructuring could provide significant tax savings.

Mike Trabold, director of compliance risk at Paychex®, explains that many small businesses would benefit from organizing as an S corporation. “This allows them to save on payroll taxes because they can take some money out as ‘profits’ versus wages that they need to pay payroll tax on,” he says.

3. Take advantage of the Health Care Tax Credit for Small Employers

Businesses that have fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000, and pay at least half of employee health insurance premiums may be able to take advantage of the Small Business Health Care Tax Credit for Small Employers. “As part of the Affordable Care Act, this tax credit enables qualifying small businesses to get a tax credit for premiums paid on behalf of employees,” explains Trabold. For more information, visit IRS.gov.  

4. Choose the right retirement plan

Trabold suggests looking into the benefits of starting a retirement plan. “Small businesses that start a new 401(k) plan can claim a federal tax credit for the first three years of the plan to offset plan startup costs, as well as take advantage of other tax benefits,” he says.   Choosing the right plan for your business takes time and research. For more information, visit the United States Department of Labor’s guide to choosing a retirement plan solution.

5. Take depreciation deductions

Depreciation deductions allow another opportunity to maximize tax savings. “You may have begun your business from home or with personal office equipment, but did you place these items—your desk, chair, or computer, for example—‘in service’? That means, did you show these items on your business return and depreciate them? If not, that is a missed opportunity,” says Dennis. For more information on depreciation, visit the IRS’s resources for small businesses and the self-employed. 

6. Ensure you’re not missing write-off opportunities

Many business owners are leaving tax money on the table, observes Dennis. “I find we don’t spend enough time investigating what can be a tax write-off. We make that judgment ourselves as opposed to meeting with a professional and asking. There are a lot of simple things on a tax return that we can miss.”

For example, even if your cellphone is being used for personal and professional use, it may qualify for a tax write off, she notes.

7. Stay on top of small business-friendly tax extenders

“Congress typically decides each year whether or not to reinstate or roll back certain tax benefits,” says Trabold. “While many of these have been eliminated or scaled back in 2014, it’s possible some could be reinstated. They include Section 179 accelerated depreciation for equipment, bonus depreciation for qualified property placed into service during the tax year, and the work opportunity tax credit.”

By thinking about your taxes year-round, doing your homework, and seeking professional guidance when necessary, you can find significant tax breaks and improve your business’s bottom line.