Tax filing is one of the most complicated aspects of running a business. The truth is that companies are always in search of finding ways to help them save up on their taxes. But when it comes to filing taxes, a lot of huge corporations often get a pass for filing it.
Out of all the Fortune 500 companies that have filed their taxes in 2018, 60 of them avoided all federal income taxes. Massive names in the business, such as Chevron, IBM and General Motors, got tax refunds and had an average tax rate of -5%. It only defines the widening gap between what corporate giants and ordinary people pay.
Here are a few ways how corporations can skirt taxes and earn more.
A global change
One of the strategies that multinational companies use to avoid or minimize their tax is to segregate much of their profit internationally. By moving their revenue geographically, they are able to mitigate the U.S. taxes that they need to pay. Another way to keep their taxes low is by housing it in geographical areas that have low taxes.
Check all the eligible expenses
Even small and medium enterprises can pick a thing or two from these giant moguls. Corporations are always on the lookout for ways to increase their paper expenses as well as their corporate losses. Small businesses should stir away from poor record keeping. They can do that by making sure to keep a record of all the receipts and track all the deduction eligible expenses. The best way to keep your taxes as low as possible is by tracing all the costs related to your business.
It is the same technique that huge corporations use to pay little to no taxes in the United States. Looking for various tax strategies is widespread among different corporations. One such credit law is for research and development. Under the R&D credit, expenses used for developing products and all qualified research aren’t deduced from the company’s revenue before calculating their taxes. So, the companies get reduced for everything that they have spent on it.
Creating subsidiaries overseas
A unique way to save on taxes is by buying a property in another country and declaring it as a separate company. They can create foreign subsidiaries in countries that have low fees and run their business there. Doing so will help them save as much of their profit since most of their earnings are coming from overseas. However, the 2017 tax laws discourage this kind of practice from getting a higher tax rate.
These are just a few of the ways that huge corporations are saving from their taxes. Knowing these tips can help save small businesses save a lot of their money and use it to expand their business instead. It is highly suggested to get tax planning help in Utah to know how to get through the entire process. Doing so will make it much easier for businesses to apply for a tax credit.