To pay less taxes in a company is undoubtedly an important part of the management of any business. Therefore, there are strategies that can help reduce them. And this can have a significant impact on the profitability and ability of a business to grow.
In this article, we will go over the main strategies you can use to reduce tax costs in your business.
Strategies to pay less taxes in a company
Let’s take a look at the main strategies we can use.
Hiring a consultancy specialized in tax management
We dare to say that it is one of the best strategies to reduce tax costs in your business.
First of all, because it allows you to have the necessary knowledge and experience to reduce the fiscal costs of your business. This ensures that you can always apply the new tax rules and regulations. Tax benefits have changed over the years. They often even include rebates, credits and other special conditions that are adjusted to the characteristics of today’s environment and dynamics.
In order for your company to be able to adapt to all these novelties and take advantage of the tax benefits available to it according to its characteristics and income level, professional help and advice is indispensable.
Secondly, because you save time and effort, and therefore you can focus on other important tasks for the success of your business.
Thirdly, because you will avoid penalties, which will give you peace of mind and stability in the management of your company.
Finally, because you will not have to carry out all the other strategies that we will discuss below.
Digitization of accounting
Technology is a valuable tool for reducing tax costs in your business. All this is possible if you take concrete steps towards the definitive digitization of your accounting.
Recording expenses, documenting transactions with receipts and, in general, having accurate information to fill out forms is part of key actions that support your strategies to save on tax payments.
There are a variety of digital tools you can use to automate tax processes and reduce management costs.
For example, you can use accounting and invoicing software tools, which allow you to keep a detailed record of your income and expenses, as well as automate the processes of invoicing and managing your finances.
You can also use cloud-based software tools. These allow you to access your data from anywhere and at any time. In addition, they give you extra security.
That way, you will centralize and systematize all the information flow. And with it, you will increase the levels of knowledge and monitoring of your operations.
Make a complete control of all the expenses that you can deduct
It is necessary to be very meticulous and detailed in the process of control and registration of all the expenses that you are receiving in your business. But of course, only those that are related to the activity you perform.
What does this mean? Well, that there should not be any invoice or expense ticket that has not been correctly registered. But it also means that we can only impute expenses related to our activity, not any that we have had.
To be able to deduct the amount of the VAT, you will only be able to do it if you have the corresponding invoice as proof.
If you only have a “ticket” it can be deducted as an expense for the IRPF or Corporate Tax. Depending on whether you are a self-employed person or a company.
Keep in mind that invoices allow you to keep a detailed record of your expenses. This allows you to identify areas where you can reduce tax costs.
Make forecasts of the taxes you will have to pay
Therefore, it is important to plan the fiscal and accounting closing of the fiscal year you are in.
To do this, from the beginning and as you carry out operations in your business, find out what our quarterly or annual obligations will be. Depending on whether we are talking about VAT, Income Tax or Corporate Tax returns.
Therefore, it is advisable that you keep your business accounts up to date. That is to say, that you register your operations of expense and income every time that they take place.
Take advantage of tax deductions to pay less taxes in your company
Tax deductions are there, you just have to take advantage of them.
They allow you to reduce your taxable base, and therefore pay less tax in your company.
To take advantage of tax deductions, it is important to know the tax and accounting laws, tax regulations. As well as the exemptions and deductions to which you are entitled.
It is also important to keep a detailed record of your business expenses, so you can identify the deductions to which you are entitled.
In addition, we can do more things that will lower our tax bill. Among others we highlight the following.
Negotiate the implementation of restaurant “tickets”
Companies that give this additional benefit to their workers have a great benefit from the point of view of tax savings. It is 100% deductible for corporate income tax purposes.
For the workers, they are also positive, since these amounts are exempt in IRPF. As long as they do not exceed €11 per day, maximum 20 days per month, and do not take place when you collect travel allowances. The excess of €11 is considered as special remuneration and is taxed in the IRPF.
Provided that they are made to foundations and associations declared of public utility, in accordance with Law 49/2002.
In the Corporate Income Tax, they are not deductible expenses. But in exchange they give right to a deduction in the integral quota of 35% of the donation. This deduction can be increased to 40% if in the two previous years donations had been made for the benefit of the same entity.
Although it is also true that there is a limit on the base of this deduction of 10% of the taxable income of the year. However, the amounts exceeding this limit can be applied in the following 10 years.
In the IRPF, you can deduct 80% of your donations up to the amount of 150€.
From those 150€, you can deduct 35% of the amount exceeding this amount or 40%, if you have donated in the two previous years an amount equal to or greater than the previous year.
Investing in R&D&I
The tax benefit for R&D&I in the Corporate Income Tax (IS) consists of the possibility of deducting from the tax liability 25% of the expenses dedicated to research and development (R&D). And 12% of the expenses allocated to technological innovation, subject to certain maximum limits, of course.
But it is also considered as a tax benefit the existence of freedom of amortization of assets assigned to R&D&I activities.
File your taxes without errors and as quickly as possible
It is very important not to miss the deadline for filing taxes. A delay could lead to more or less costly fines or penalties.
As a general rule, quarterly taxes are usually filed on the date of the month following the end of the quarter in question, and up to the 20th of the month.
In addition, it is important to check to make sure that there is no error in the filing of the tax return.
That is to say, make sure that the amounts are correct and are indicated in the corresponding boxes.
Conclusion to pay less taxes in the company
Reducing tax costs is fundamental for a business. And for this it is important, if not essential, to take advantage of tax deductions.
The advice of a good expert in fiscal management will help us to use the invoices as a management tool. At the same time it will make it easier to use technology.