If you own a small business, you know that there is always more work to be done.
You’re probably an expert in the field of your business or the product that you sell. More than likely, you’re used to taking on multiple roles to ensure your business is growing to its full potential. With all of the things you need to do throughout the year to keep your business running, you may not have had the time or the energy to study up on the latest tax regulations.
When it comes to taxes, there are a few things you may have overlooked. Here are some pieces of advice that can help you save money down the line, and keep your business protected from penalties when tax season rolls around.
The 5 most overlooked tips that may help your small business:
- Keep Your Receipts (digitally) It might sound simple, but by keeping track of all of the transactions you make related to your business, you can maximize your tax deductions down the line. It’s important to connect your small business’s banking activity to a bookkeeping software– that way you can keep track of every single expense, and won’t have to miss out on potential savings if you misplace a paper receipt.
- Plan for Retirement By establishing and fully funding a retirement plan, you can pay yourself instead of the IRS. Whether it’s a SEP IRA or a Solo 401 (k), by investing in retirement for yourself and your employees, you can defer taxes and potentially save thousands on payroll taxes. There are many options for potential retirement accounts, including Traditional and Roth IRAs, and Cash Benefit Pension plans.
- Deduct Your Home Office. Did you know if you operate your business from home, you could qualify for a home office deduction? There are a few things that define a qualified “home office.” It must be exclusively used for “business purposes” to be considered a home office. These include uses like business administration, managing your business, meeting customers, or storing inventory. It cannot double as a room for personal purposes, like a living room or a dining room. If you’re not sure which part, or how much of your home qualifies as an office, we can help you figure it out.
- Choose the Right Classification. The corporate structure you use for your business is more important than you might think. Whether you’re a sole proprietor, S-Corp, LLC, Partnership or C-Corp, the ideal structure for your business may change depending on its size and income. This can affect tax planning and the advantages you can get on your taxes. It’s a good idea to consult with an accountant or other qualified tax professional every few years (or even more often depending on how rapidly your business is growing) to figure out the correct structure for your business, and to help maximize your potential business tax deductions.
- Get Rid of Your Old Equipment. As your business has grown, you’ve probably purchased some equipment or furniture that you don’t use any more, either because it’s no longer relevant to your needs, or because it is no longer functioning the way you need it to. If you have good equipment or furniture that you don’t need, you can donate it to a 501(c)3 nonprofit and deduct its fair value. If you have equipment or furniture that has depreciated so much in quality that it no longer is usable, you can claim a Section 1231 loss for discarding it.
If you want to maximize your small business’s potential, need relief from any tax worries, or simply don’t have the time to deal with the IRS, we would love to help. Book your free consultation with one of our tax experts today.