If the scale of the business does not make it possible to switch to a simplified taxation system, there are tools that allow you to legally reduce income taxes.
It is possible to reduce income tax by reducing the taxable base. Reducing income is not suitable for this purpose due to the illegality and contradiction of the meaning of entrepreneurial activity. It remains to increase costs, or rather to redistribute them.
So, for enterprises operating on a common taxation system, you can legally reduce the amount of income tax using:
- transfer of capital expenditures to current ones;
- transfer of fixed assets to leased assets;
- leasing;
- creation of reserves;
- writing off losses of past periods;
Transfer of major repairs to current
When carrying out overhaul of a building or equipment, it is necessary to take into account that the costs of it increase the value of this building or equipment and these costs will be written off through depreciation over several years. If you write them off right away, you can reduce the tax in the current year. To do this, it is enough to conclude a contract with a contractor for the provision of maintenance, and not capital. However, caution should be exercised here, because not all costs can be attributed to current and written off.
Transfer of fixed assets to leased assets
To reduce income tax in this way, it is enough to transfer fixed assets to another company, and then rent them from the same company. This will allow write-offs to be incurred in the form of rent payments, rather than partially over several years. The lessor company can be a small business created by you with a simplified tax regime.
Leasing
Leasing makes it possible to apply accelerated depreciation to an object. This allows larger amounts to be written off as expenses, reducing income tax more quickly than in the usual way.
Creation of reserves
This method allows you to reduce tax only for the quarter, not for the whole year. It is such a reserve, a kind of "piggy bank" in which the company accumulates money in small parts during the reporting period, in order to write them off in whole amounts at one moment.
Write-off of losses of past periods
If the company was at a loss, but in a certain year it turned out to be profitable, this loss is transferred to the current year in part or in whole amount.
Offshore
This method is suitable only for large companies, since offshore the amount of the duty is inversely proportional to the size of the authorized capital.
To legally reduce income tax, it is important to correctly and competently work with the company's costs. Without sufficient experience and qualifications, you can massively increase all costs, which will lead to an increase in costs. For this reason, it is not recommended to engage in income tax reduction on your own, but rather to outsource the company to accounting support firms.
Such a company is "Numbers Pro", which has been providing high-quality accounting services for more than 16 years and has conquered the market thanks to its reliability and individual approach to its clients. The company's professionals solve all the problems that are related to accounting and tax accounting at enterprises of any field of activity. Our many years of successful experience with many renowned companies is proof that we can be trusted.
Article Resources: https://anynote.co/read-blog/2425
https://www.extelicast.com/read-blog/16126
https://voticle.com/a/articles/145922/onsite-accounting-and-offsite-accounting-services-explained
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