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Make It Your Business to Get All Available Deductions

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stacks of old dirty pennies. bronze and copper pennies isolatedRunning your own business comes when joys and heartaches. The key is to avoid too much of the latter.

With that being the case, recording and paying taxes as a business owner can be one of life’s biggest headaches.

If you’re self-employed and have no employees under you, life is much easier when it comes to your tax responsibilities.

On the other side, making sure you take the right amount of money out for employees and meeting your other tax responsibilities as a business owner, well, it can sometimes seem downright taxing.

Don’t Make Running a Business Taxing

In running your own business, be sure that you not only are meeting all your tax requirements, but that you are receiving the deductions entitled to you.

For those individuals working out of their homes full-time, there are myriad of deductions one qualifies for, though many oftentimes forget or quite frankly do not know what is and isn’t acceptable to the IRS.

If you’re one of those self-employed folks working out of a private residence, note the following:

  • Your home is deductible…. up to a point – Working out of your home does allow for some deductions, but don’t expect to cover the entire residence from top to bottom. If you set aside a room etc. as your work area, you can use that as a deduction (estimate the square footage involved). What you can’t do is try and deduct the entire residence;
  • Your home office supplies – Assuming that your business needs office supplies, those can be used as deductions. Make sure you save the receipts for items you purchase. If you end up getting a new computer, fax machine, printer or other such office item, you can also deduct those. The key is always to save the paperwork from such purchases, especially if you need to show at a later date that you did in fact buy such items;
  • Your client meetings – When you mix and mingle with clients, you can deduct such meetings (that is up to a point). Meals and mileage to and from such meetings is fine, but don’t try and deduct a gift you may have bought them etc. Stretching things too far could run you the risk of an IRS audit, so it is definitely in your best interests to record and be honest about your deductions. If you do have legal questions or in fact do get audited, a New York tax attorney or one closer to you can assist you with how to proceed;
  • Your health insurance – Unless you have been under a rock for the last three or so years, you know about the governmental requirement that the majority of Americans be covered by health insurance. As a result, make sure you not only have coverage, but look to see if you are eligible for a tax credit. The whole idea behind Obamacare was to make health insurance affordable for the majority of the country. When it comes to medical items, you also can deduct a portion of your doctor visits (including mileage to and from) and prescriptions or other such purchases;
  • Your retirement planning – If you are wise, you have been putting away money over the years for retirement. In doing so, you are planning for that day and time when you will not be working, most likely getting by on Social Security income. Whether you have an IRA or other such retirement vehicle, try and contribute as much as possible to it yearly. This then allows you to record deductions from the money you put into the plan. While there are caps on how much individuals may invest in their retirement portfolios, doing it now and getting the deductions makes it well worth it.

When it comes to doing your taxes as a self-employed business owner, they don’t have to seem as frightening as they might first appear.

Getting organized now, keeping all your necessary receipts, and knowing who to turn to in the event of a dispute and/or audit, can make all the difference in the world.

If doing your taxes seems a bit taxing to you, put organization and the help of others to work for you.

Photo credit: BigStockPhoto.com

About the Author: Dave Thomas writes about business topics on the web.

Am I Missing Any Tax Breaks?

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If you run a small business, you know that every dollar really does count.

Whether you’re just getting off the ground or your business has an established track record, it’s still helpful to save money whenever possible.

Tax deductions are one area where a little knowledge can go a long way. The more breaks you’re aware of, the more opportunities you’ll see for your business to save money.

To give you an idea of what types of savings are available, let’s go over some of the most commonly overlooked small business tax deductions:

Bad Debts

One of the biggest surprises many new business owners have is just how hard it can be to collect money from certain clients or customers. This issue is especially prevalent among service businesses.

Even though it’s very frustrating to have clients who simply won’t pay what they owe you, the silver lining is bad debts can generally be deducted when you file for your business.

Mileage

Whether it’s driving to a meeting, attending a networking event or going to see a client, you’re allowed to deduct mileage that’s used for work purposes.

Just be sure that whenever you want to deduct mileage, you log the date and where you’re going, as well as the mileage at the beginning and end of your trip.

Charitable Donations

You may already be aware that eligible donations you make to charity can be deducted.

But what plenty of business owners don’t realize is it’s often more advantageous to make deductible donations through their business than from their personal money.

Cloud-Based Software

More and more software is moving to the Cloud.

The main advantage for customers is it allows them to access their software from any computer with an Internet connection. And one of the primary advantages for software developers is whenever there’s a bug, they can instantly push out a fix.

Because they provide ongoing service, many cloud software developers charge on a monthly basis. If you have one or more cloud software subscriptions, be sure to deduct all your monthly charges.

Business Trip Incidentals

Landline calls, lodging taxes, cleaning and laundry are all examples of acceptable incidentals from business trips that you can deduct.

And as long as you keep a log, you can also deduct train, subway, bus and taxi fares.

Loan Interest

If you borrow money against a personal loan like your mortgage in order to buy equipment for your business, you can deduct the interest on your loan.

The two most important things to remember about this break are that you need to use the money for your business, and you also need to document exactly how you used it.

As you can see, there are plenty of tax deductions available for small businesses. The key is keeping track of all of them.

By making it a priority to keep current and detailed records throughout the entire year, you’ll be able to maximize your deductions when the time comes to actually file your taxes.

Photo credit: American.com

About the Author: Jesse Galt is a freelancer who writes about a wide range of topics, including mobile credit card processing and small business marketing strategies.