Taxes are an inevitable part of doing business. Sometimes it seems like for every dollar that comes in, another dollar goes out for tax payments. Income tax, payroll tax, sales tax, property tax, self-employment tax ౏ the list goes on and on.

Before you give up hope entirely, be encouraged. There are exceptions to the tax code that allow some of the money that passes through your business to be classified as non-taxable. Although most of these items are not necessarily "income," you don't have to pay tax on them.

Obviously, you'll need to consult your tax advisor to make sure you are in compliance with federal and state regulations. That being said, here are seven items you probably shouldn't pay tax on:

1. Income reported on your personal return
   In many types of small businesses, income is reported on the owner's personal income tax return. This is usually the case with sole proprietorships and S corporations. And if income is being claimed on a personal tax return, it probably doesn't need to be claimed on a separate corporate return. To do so would be double taxation, and most business owners would agree that once is more than enough.
2. Loan proceeds
   The proceeds from loans qualify as non-taxable. That's only fair because the proceeds aren't actually income in the first place. The loan needs to be repaid, and when it is you may be able to deduct the interest expense.
3. Sales tax
   Most businesses are required to collect sales tax on the products and services they sell. These funds don't belong to your company. You are simply collecting them and passing them on to the government. For that reason, sales tax amounts are non-taxable. Make sure you don't lump sales tax in with your actual sales figures.
4. Like-kind exchanges
   If you exchange business or business investment property for similar property that will also be used for business or business investment purposes, and no gain is realized, then there is no tax on the transaction. The value of the property being exchanged needs to be reasonably close, however. Just because you say they are worth the same amount doesn’t necessarily mean that the IRS will view it the same way. Consult your tax advisor to make sure you are adhering to valuation guidelines.
5. Appreciation
   The appreciation of your company's assets is non-taxable. However, if you sell the assets at a gain, then the gain can be taxed.
6. Insurance proceeds
   Just as loan proceeds are non-taxable, insurance proceeds are usually non-taxable as well. The rationale is that the proceeds are not income, but rather reimbursement for an offsetting loss.
7. Deductions
   Every business has deductions that can be offset against income to reduce the amount of income that is subject to tax. These deductions come in a variety of forms and are described in detail by the IRS. Just be aware that some deduction may be subject to limitations.

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