Small business owners usually find thinking about taxes just as fun as paying taxes but one thing that we can all appreciate is saving some money on taxes.

Here are 5 tax tips for small businesses that can hopefully help you to do some smart tax planning for your business.

#1 Get Organized

Yes, this tip is somewhat broad and not directly related to paying taxes because after all there is nothing in the tax code that will give you a tax deduction for being organized (although there are requirements for record keeping). That being said, you can save yourself a lot of the hassle that is usually associated with tax time if you do things like use QuickBooks Online or let your business credit card act as an online record keeper because of the availability of online credit card statements. The more ways that you can automate your record keeping and retrieval of records then the better shape you will be in when it comes to get your business tax information together.

#2 Revisit Business Structure

There are different tax advantages (and disadvantages) to each of the various business structures. Even if you have been a C Corporation or an S Corporation for many years it may be wise to spend some time with your CPA or other tax professional and re-evaluate whether your business is in the most tax efficient form of business entity.

It is not uncommon for a seasoned tax adviser to recommend that a new business start out as one type of entity for the first year or two and then re-characterize themselves as another form of entity altogether so that the owners of the business can take full advantage of the various tax benefits available to them in different business formations.

For example, calculations involving owner’s basis, loss carryovers, and initial loans for startup expenses may be handled differently from C Corporations to S Corporations so making the change from one to another after a year or so can be a smart idea in some situations.

#3 Find Tax Friendly Workers

There are certain tax benefits inherent with certain classifications of employee or independent contractor that you pay to help your business. One example is that if a small business hires a family member then they may not have to pay Federal unemployment taxes.

Likewise, if you hire your children to work for you then you may not have to withhold income taxes and Social Security from their paychecks. Then of course, there is the classic debate about hiring an employee vs. hiring an independent contractor.

Many employers prefer to hire independent contractors because then they are not required to take out any withholdings, adhere to strict labor laws, pay time and a half, pay close attention to the state tax code, etc. but just be forewarned that you should avoid attempting to characterize someone as an independent contractor if they are really your employee or you will face the wrath of the IRS.

#4 Contribute to a Retirement Plan

Many small business owners are so wrapped up in managing their business that they neglect the very important issue of saving for their retirement. Saving for retirement is not only an important thing to do but also a great way to save some money on taxes. From 401k’s to IRA’s to SEP’s to SIMPLE’s to Keogh Plans to any other number of different small business retirement plan options each and every one of them has certain Federal government sanctioned tax benefits that every savvy small business owner should look into.

#5 Take the Section 179 Deduction

Your business may be eligible to lower your taxable base by electing to take the Section 179 deduction. The Section 179 deduction essentially works to allow businesses to fully expense in the current year certain things that ordinarily would be required to be slowly depreciated over time (meaning that the faster one can expense an item then the lower the taxable base and the lower the taxes due). Additionally, the recently enacted American Recovery and Investment Act of 2009 increases the allowable Section 179 deduction amount which makes this deduction even more attractive to qualified small businesses.

Disclaimer: This advice is not to be considered tax advice or tax guidance for any specific situation. Readers are encouraged to consult their own CPA’s or other tax professionals for tax advice specific to their needs.

About the Author: Joel Ohman is a CFP® and the owner of a credit card comparison website. He is a fan of RateNerd ever since following us on Twitter and encourages you to follow RateNerd on Twitter as well!