The entrepreneur will testify that they have a lot of unique challenges. They have to contend with eighteen hour days and they have to worry about whether all of that effort will amount to anything in the long run. But they also have to contend with the unique struggle of business taxes. That time of year is upon us and entrepreneurs want to know how to save a few extra dollars on tax. A bit of research and effort is a small price to pay to avoid overpaying on one’s tax returns. Those that are careful and understand the legal considerations can minimize what they have to pay the government.
Tax Planning Tips
1 – Track your expenses
If you have to buy gas to get to work every day or purchase a new stapler, these expenses should be recorded. Everything that relates to business, no matter how minor or seemingly insignificant needs to be recorded. This will also help to avoid a dreadful audit when the time comes.
2 – Save old tax documents
All of the data that you have collected regarded your expenses along with the tax forms and returns should be filed away and stored. This will be particularly helpful in saving money if you have to file an amended return.
3 – Remember other deadlines
You may be accustomed to the April 15th deadline for your own personal tax returns. But businesses have other important dates that need to be remembered. Your estimated taxes are due four times every year. Sale taxes and employee taxes are also due regularly. Find out the deadlines for your state for a business of your size.
Tax Deductible Expenses
4 – Vehicle expenses
If you use your vehicle for your business, you can deduct it from your taxes. You will just need to stringently keep track of when you use your vehicle for business. You must separate personal use from business use, and only the business use will be tax deductible.
5 – Startup costs
The entrepreneur knows as well as anybody that starting a new business can be expensive. But, at least those costs are tax deductible. Just ensure that you are carefully keeping track of them.
6 – Business lunches
If you have a business meeting and you pick up the tab, the expenses for that lunch are tax deductible. If you tax a potential client out to a baseball game, the price of those tickets are tax deductible. Any expenses related to acquiring a new client are deductible.
7 – Travel
Entrepreneurs often have to spend a lot of time on the road acquiring new clients. These travel expenses are tax deductible. Your plane fare is tax deductible. In fact, if a trip is just 50% business and 50% pleasure, it is tax deductible. Maybe you should start meeting clients at the Grand Canyon!
8 – Stolen products
At least it was not a total loss. If you sell a product and the other party does not pay for what you sold, that is tax deductible. (Although it should be noted that this only applies to products, not to services).
Tax Return Tips
9 – Consult the IRS
Their website makes it very easy to acquire the information that you need for filing your taxes. If you have a question while filing your taxes or there is something that you just do not understand, check their website to see if there is something regarding it. There probably will be.
10 – Start a 401K
Contributions to your 401K reduce your taxable income. This means that you will not have to pay as much money back to the federal government and therefore avoid overpaying on your taxes. You will not have to pay taxes on that money until you take it out for your retirement.
These tips should help you navigate through filing your taxes. The stressful time of year does not have to be stressful if you are wise and use the law to your advantage.