Small business owners are constantly on the lookout for ways to save money and position their company for success moving forward. Now that we’re in the heart of tax season, it’s time to assess your business finances and figure out exactly what you owe to the IRS—and how much you can expect to save with deductions. Here’s what you should know about taxes when it comes to your small business.
Small Business Deductions Every Small Business Owner Should Be Aware Of
Forgoing valid deductions means leaving money on the table, so make sure you take the time to determine all deductions possible.
If you have to travel to take care of business needs, there are many expenses you can deduct. Your work airfare, hotel expenses, work car rentals, laundry expenses, and even gas are deductible. When it comes to food, you have to be a bit more careful; you can only deduct up to 50 percent of your meals, and costs incurred by any family members or friends traveling with you cannot be deducted.
If you work from a home office, you should attempt to claim a deduction—don’t let fear of an IRS audit prevent you from getting the money you’re owed. As long as your home office fulfills all the stipulations and you’ve been diligent about saving and recording important home office documentation, you should have no problem claiming this deduction. Ensure the following are true before claiming a home office deduction:
- You can deduct home office expenses based on square footage of the office space. Divide the square footage of your home office by your home’s total square footage; that’s the percentage you can claim.
- You must use a separate computer for work—you’ll be hard-pressed to prove that your personal computer can be categorized as a deductible expense if it’s in use by your family members or roommates.
- Your home office must be a separate area; it cannot run double-duty as a living room or kitchen.
Using Independent Contractors
If you’re a new company and you’ve found it’s time to expand, consider using independent contractors. Instead of paying for benefits, office space, and worker’s compensation, you can hire an independent remote worker. You won’t be responsible for paying an employee’s social security or Medicare taxes, saving you a great deal on your tax bill.
Tackling Tax Debt Issues with the IRS
If you owe back taxes to the government, the time to act is now. Coming up with a tax payment plan or arrangement is the best way to avoid costly and business-ruining consequences. Should you ignore notices from the IRS, you could find your possessions seized and business ruined. Whether you choose to let your business go to settle your debt or use your personal money to pay off your business debt, your first step is to contact the government agency the moment you know you’re in trouble.
Getting Professional Help
If this is your business’s first fiscal year or you’ve struggled with tax filing processes in years prior, it’s time to invest in some outside help. Business financials bring a new level of complexity to tax returns, and it can be difficult to juggle your personal and professional tax responsibilities. Head to a site like http://helpwithtaxproblems.org/ to access the professional help needed to get your business back in great financial standing or hire an in-house accountant that can help you make sense of the ins and outs of the tax filing process. The latter option can help you organize your financial documentation for this year’s tax filing season and the years to come. Regardless of whether you use an accountant or decide to outsource your accounting needs to an online professional, going to someone with financial acumen and years spent dealing with the IRS can only help your business. While it may present an upfront investment, paying a tax resolution specialist to handle your small business’s tax needs will provide invaluable peace of mind.
Make 2018 a profitable business year by starting off on the right foot with the IRS. Keep these tax tips in mind and set yourself up for success.