If you own a small business or work from home, these six helpful tax tips may help you reduce your tax liability, increase your profits, and help your business grow.

Business loans

Luckily for small businesses and the self-employed alike, business loans are not considered taxable income, and while the principle on your loan is not tax deductible, the interest you pay on your loan is. Also, if you use the money for eligible business expenses such as purchasing assets or operating expenses, those items and expenses can be deducted from your taxes. Keep in mind that if your lender forgives any part of your debt, that amount will become taxable income.

Adjust your tax bracket

Accelerating or deferring your income is an effective way to ensure that your business stays in the lowest tax bracket achievable. It is a simple technique that takes some forethought.

When to accelerate your business income: If you anticipate that your business will substantially grow in the next tax year, moving you into a higher tax bracket, you could consider accelerating your business income this year. After all, it makes sense to pay taxes on something in a lower tax bracket sooner, than in a higher tax bracket later. In order to do this, you simply accelerate taxable income into the current year to save on future taxes next year. Some examples of this are:

• Sell any assets that would result in a capital gain this year in order to accelerate income.
• Collect any owed dividends before the year’s end.
• Take any planned distributions from your retirement plan this year instead of next. (Don’t forget the 10% penalty unless you’re 59½ years of age or meet an exception)
• Advance collections by providing discounts or incentives for end-of-year payments.

When to defer your business income: To prevent your business from moving to a higher tax bracket during the current tax year, consider deferring end-of-year income until the next tax year.

• Delay billing so that you receive payment at the beginning of the next taxable year.
• Defer year-end bonuses to the following year.
• Maximizing your retirement plan contributions.
• When you sell business property, consider receiving payments in annual installments, this will defer taxes on the capital gains you make over multiple tax years.

Stay current on your estimated quarterly taxes

Some self-employed people are surprised to discover that if they expect to owe taxes of $500 or more when filing a return, they should be paying estimated quarterly taxes to the IRS. The good news is when you do pay quarterly taxes, you will have paid most of what you owe by the time tax-time rolls around. The bad news is, if you fail to do this, the IRS can hit you with a penalty for late payments.

The penalty amount depends on how late you are and how much you owe. It is better to pay late than not at all because the penalty can accrue daily and will add up substantially. The IRS has an estimated tax worksheet (Form 1040-ES) available on to help you estimate the quarterly taxes you owe. Quarterly estimated taxes are due on April 15, June 15, September 15 and January 15 of the year.

Make the most of your deductions

Being self-employed gives you a bountiful selection of deductions that can help your final tax results. Consulting irs.gov and your tax professional are the best ways to ensure that you find every deduction for which your small business is eligible. Three of the most common and powerful tax deductions for small business owners are:

Home Office: If you use part of your home regularly and exclusively for business, you can deduct expenses for the business use of your home. This deduction is available for homeowners and renters alike, and applies to all types of homes. The IRS has two calculating options when choosing a deduction for your home office, the simplified option, and the traditional method.

The simplified option pays you a standard deduction of $5 per square foot of your home that is used for business (with a maximum of 300 square feet). Home-related itemized deductions can also be claimed in full on a Schedule A (things such as mortgage interest and real estate taxes). A home depreciation deduction cannot be used for the years that the simplified method is used.

If you use the traditional method, you may be able to deduct a portion of your mortgage or rent, property taxes, insurance, utilities, repairs and additional expenses. This method also includes a possible home depreciation deduction. The amount you can deduct is a percentage based on the square footage of the business portion of your home vs. the total square footage of your home. That percentage is then applied to all associated costs. For small businesses and the self-employed, being able to deduct eligible home office expenses against self-employment income is one of the most important and effective tax deductions out there.

Automobile: If you use your car for business you can choose from two types of deductions. The standard mileage method or the actual expense method. The standard mileage method takes the total miles driven during the year, subtracts the miles driven for personal use and then multiplies the remaining miles with the appropriate IRS standard mileage rate. The IRS standard mileage rate for 2014 is 56 cents per mile. If you use the standard mileage rate, you cannot deduct actual car expenses in the same year.

The actual car expense method may include a deducted percentage of payments, interest, fuel, insurance, repairs, maintenance, etc. You will need to keep a log of business miles driven as well as records of the actual car expenses. The depreciation expense of your vehicle is also deductible. At the end of the year, you divide your business miles by total miles driven. The resulting number is your business use percentage. You then multiply the business use percentage with your actual expenses to figure out your car expense deductions.

Office Equipment: Office equipment is a non-real estate business asset that you use in your business. These assets usually have a determinable life span that exceeds one year and has a value that can be calculated and depreciates over time. Some examples are office furniture, computers, printers, telephones, scanners, etc. There are several ways you can deduct office equipment. One option is to use the section 179 deduction that allows you to deduct the entire cost of an asset in the year you acquire and start using it for business. The other option is a depreciation method, either the straight line or the accelerated method. These methods allow you to receive a deduction percentage over the course of three years using a mathematical equation divided by 3, 5 or 7 years (depending on the category of your office equipment). Talk to your tax professional about which method is right for you.

Keep organized and thorough business expense records

Chances are, if you were to look through your wallet or purse, you will find wadded up, faded old receipts. Receipts that you likely have long forgotten about. If you own your own business, it’s paramount that you treat your receipts like money, not trash! Those little pieces of paper can add up to big business deductions. Saving your business expense records is more likely if you have an organized filing system in place.

Hire your children

Hiring your children has a two-fold benefit. It is one of the easiest ways to reduce self-employment income, and it helps prepare your child for the future. First, write an age appropriate job description, then fill out a W-2, and finally, write them a company paycheck every pay period. The work should be age appropriate with a reasonable hourly wage. Keep good records of the work performed, and money paid.

You can deduct their wages as a business expense, and your child will learn about the responsibility of earning a paycheck. Your child can earn up to $6,200 tax-free. You should consider putting a portion of their earned income into a Roth IRA. There is no minimum age to set up an account, and because the amount of money earned is tax-free, they can deposit the full amount of their earnings with a 0% tax liability. Also, because it’s a Roth IRA, they will be able to withdraw without taxation, and their money will earn years of compound interest. It’s a beautiful thing.

These are just a few techniques that small businesses may employ to help save money during tax season. Additional powerful tools in the small business belt are tax credits. Each year new tax credits become available while other tax credits expire and are extended. As well, new deductions become available, old deductions are retired, and tax laws change annually. It is imperative to consult the IRS website and your tax professional for the latest tax credits and deductions available to you.