Our firm does not do taxes, even though I did them for 12 years˳ When I began my practice that was a service I simply did not want to offer˳ However, we do partner with CPAs and other tax professionals to be certain that the guidance we provide our clients is in line with the advice their tax professional give them˳
As part of that guidance, there are a few tax advantages that most business owners either don’t know about or simply don’t take advantage of˳ There are also some “deductions” that should be avoided due to misguided tax information˳ Here is a list of the five most common˳
Track All Expenses Consistently
Track all of your expenses including the ones you pay for personally˳ Business owners always ask me “what about the stuff I paid for on my personal credit card?” Yes it is all deductible; you just need to get it on the accounting records and account for it˳ Keep in mind that the credit card is personal so don’t add that account to your chart of accounts˳ They will count as owner or shareholder contributions˳ TIP: Record these charges monthly so you don’t forget at the end of the year˳
Avoid Money Leaks
As a small business owner you are sometimes faced with cash flow issues˳ As a result you get behind on paying your bills and your taxes˳ While your vendor may not assess late fees, you better believe the IRS will in the form of penalties and interest˳ And these my friend are non-deductible˳ Nope not even the interest portion˳ TIP: Plug this money leak by paying your taxes on time and use those funds on an expense that is deductible˳
Maximize Retirement Contributions
Most small business owners are so busy working in their business that they never stop to think about what they will do once they retire˳ I’m not even sure you think about retiring at all˳ But the fact is you will — one day˳ So you have to sure to have some sort of nest egg˳ There are several retirement plan options that will allow you to put aside some funds tax free for your retirement and they are all tax deductible to the business˳ Yes you can have your own company retirement plan˳ Cool right? TIP: Contact your tax advisor and your financial advisor to discuss retirement plan options˳
Expenses Paid Personally
I cannot say it enough – stop co-mingling your personal expenses through the business˳ They are not tax deductible and us accountants — we know when you try to do it˳ Believe it or not we are smarter than the average bear˳ TIP: Don’t co-mingle˳
Section 179
The IRS allows you to expense the purchase of a major fixed asset all in the first year instead of depreciating it, baring certain qualifications˳ You can deduct up to as much as $500,000 and reduce your taxable income to zero˳ TIP: Hold off buying any and all equipment until December if you can so you can buy just enough and not too much˳
What tax tips have you taken advantage of to help keep more money in your business?
Source by http://ezinearticles˳com/?5-Tax-Tips-Every-Small-Business-Owner-Should-Know&id=9340131
