While running a small business, every penny counts. Your small business may have the ability to minimize taxes which could be the difference between profitability and just scraping by. Tax season for small businesses can often be quite confusing and many small business owners miss out on small business tax deductions. Don’t pay more taxes than you owe, and follow these year-end money-saving tax preparation tips for small business owners
1. Deduct Your Home Office
Are you self-employed or a small business owner working from home? If so, you may be able to
take the home office tax deduction. Some workers fear that the home office tax deduction raises
a red flag for the IRS to conduct an audit. Although in some cases this could be true, you have
nothing to worry about as long as you keep excellent records that satisfy IRS requirements.
Over the last few years, there has been a proliferation of home offices, and tax officials could
not possibly audit all returns containing the home office deduction. Put your worries aside, there
is no reason to fear an audit just because you file for a home office tax deduction.
With that being said, you do have to determine what portion of your home is exclusively and
regularly used to running the business. This tax tip for small business owners is excellent
because people don’t often realize they can deduct expenses related to the home including
insurance, mortgage interest payments, general repairs, maintenance, and utilities such as
internet service.
2. Don’t Ignore Auto Expenses
There are two methods of calculating the business use of your car, and you’ll want to calculate
both ways to see which method yields the largest deduction for your business. The Standard
Mileage method is a method used to compute the business use of your car simply by multiplying your business miles by the amount per mile allotted by the IRS. The second method, The Actual
Expenses Method, is based on the expenses you actually incur including gas, oil changes, tire
purchases, insurance, car washes, etc. The trick here again is the ability to accurately report the
percentage of time your car is being used for work. Filing for the correct deduction can
maximize your savings.
3. Deduct Your Business Equipment Expenses
Section 179 allows businesses to avoid tracking depreciation by treating the equipment as a
business expense instead. In fact, the full purchase price of qualifying equipment and or
software during the year can be deducted. Any business that purchases, finances, and/or
leases new or used business equipment during the tax year 2018 should qualify for the Section
179 deduction.
You should note, however, you must file for a Form 4562 to elicit a Section 179 deduction. A
Section 179 calculator can help you determine how much you can save.
4. Follow Your Spending To Track Deductions
This may seem like obvious knowledge, but it is surprising how often it gets ignored. It is
imperative a business does not wait until the last month to start to tally expenses, revenues, and
other financial records, as this will only result in an overwhelming nature of business taxes.
Online banking provides an easy and convenient way to track spending and should be utilized
to shrink the possibility of missing things. A little time spent here and there throughout the year
will surely be less painful than organizing hundreds, and even thousands of receipts all at once.
Simply staying on top of your spending to track deductions is an important year-end tax tip for
small business owners.
Final Thoughts
Tax preparation for small businesses can be a ton of work. There are important small business deductions you want to make sure your business is maximizing on. Hiring a local CPA can ensure that your business is receiving every dime it should be, and ensuring total government compliance. For small businesses, a local CPA can be your best business partner.
Limitless Investment and Capital Professional Tax Services in Detroit, Michigan
Are you a small business owner in Detroit looking for additional tax tips to save money? Spending the
extra coin to hire a professional may be well worth it. Limitless Investment and Capital’s tax
experts have up to date knowledge on the constantly changing deductions and credit changes.
Our tax assistance has the ability to maximize your deductions and minimize any human error
associated with filing your taxes. Spend less time counting and calculating, and more time attending to other areas of your business by hiring a tax expert from Limitless Investment and
Capital.