Owning a small business can make doing your taxes more difficult than if you worked for someone else. However, small business owners also have many more opportunities to write off their normal expenses. It is important to be familiar with the tax code before attempting to do your own taxes. Many small business owners are use to filing their own individual taxes and are likely to attempt to do their business taxes as well. Before filing your taxes, you should know a few things.
There are many ways to get the most deductions on your taxes. Some of these are common knowledge while others are rarely considered. The first deduction you can use is expenses such as merchandise. If you have left over merchandise in your store you have two options, pay to store it or donate it. By donating the merchandise you will save the money on storing it as well as get a tax deduction for the amount you donate.
Another great way to get a deduction to hire your spouse, this can be beneficial in multiple ways. If you provide health insurance coverage for your employees, you are able to write that expense off in your taxes. By hiring your spouse, you get to deduct your own health insurance expenses by providing coverage for your employee’s family.
Home Based Business
Working from home offers you a wide variety of benefits including huge tax deductions. Many small business owners work from home for the perks of being home with family or being able to work in their pajamas. Smart home business owners know the amazing tax deductions that can be claimed. From your utilities to your phone bill and internet costs, you can even deduct a portion or your rent or mortgage as long as you have a dedicated home office space. If you work from home but drive to meet potential clients, you should be sure to keep track of your mileage, as the deduction is great especially with the high gas prices.
You should be sure to have a separate checking account and credit card for your business than you have for personal use. This will make it easier to keep track of business expenses and earnings. It is very important to keep your personal money and business money separate to make filing your taxes a smooth process. You should also keep track of the money that comes in and goes out throughout the year. By keeping accurate records as well as receipts, you will make the task of filing your taxes easier on the preparer.
There are a few ways to save money on your tax preparation. Many small business owners feel as though they must file their own taxes and may feel rather overwhelmed by the task. Because of this, many business owners will put filing their taxes off until the last minute. To make doing your business taxes easier, you can invest in tax software that allows you to simply enter your information and have it automatically calculate how much you owe. If you are worried about making a mistake using a software program but do not like the cost of hiring a tax professional, you can search for H&R Block coupons. During tax season, these coupons are readily available in many different locations.
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