Small business owners often juggle many responsibilities, including managing taxes. They may choose to prepare their own taxes, or hire a professional to prepare them. Regardless of your business structure, there are five money-saving tax strategies you can use. Keep reading to find out how you can make tax season go more smoothly. This guide explains how taxes affect small businesses. It also includes 15 bonus tips for the tax season.
Keep all receipts and other financial records. Generally, the IRS requires that you keep receipts for three years. However, you should err on the side of caution and keep all documentation for as long as possible. Make sure you have records for all business expenses, including receipts from credit cards and bank deposits. You should also hold on to your gross receipts for three years. Know more about it at WealthAbility.
Work with your accountant. It is vital that you work with your accountant throughout the year, not just when the tax return is filed. Financial decisions made without consulting your accountant can put your business at risk and cost you more money in the end. John Blake, a certified public accountant in Hamilton, N.J., offers nine best practices for small business owners to follow to minimize the impact of taxes on their businesses.
Keep updated on regulatory changes. Many tax credits are available to small businesses. In some cases, these can amount to free money. The government allows corporations to write off up to 25% of their taxable income. You can also use the tax credit for solar panels or energy-saving upgrades. The IRS has recently made the home office deduction easier to claim. The deduction now covers up to 300 square feet, but the criteria for claiming the deduction remains the same. To qualify, a portion of your home must be used exclusively for business purposes.
Another way to keep informed is to subscribe to the IRS’s tax tips. This service allows subscribers to receive informative emails from the IRS. These emails provide tax tips and advice on how to complete tax returns. This is essential for preparing for tax season and ensuring success for your clients.
Many expenses are deductible for small businesses. As long as they are reasonable and necessary, you can take full advantage of this tax break. For example, if you use your home as an office, you can deduct $5 per square foot if you use it exclusively for business purposes. Advertising is also deductible. Advertising costs include digital marketing, business cards, and fliers.
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