It’s that dreaded time of year when taxes are due… again! If only we could sweep them under the carpet and pretend they didn’t exist, right? However, it’s best to simply tackle them head on and get them done. If you’re one who waits until the last minute to file, at least you’ll be glad to know the IRS filing deadline has been extended to April 17th this year.
For Small Business Owners taxes can be especially challenging. There are so many rules, and exceptions to those rules, and endless interpretations. We certainly are not experts on the subject, but one thing is for sure, none of us want to pay a penny more than we have to. We’ve come across a posting from the American Institute of CPAs that provides ten words for Small Business Owners to keep in mind when thinking about taxes throughout the year.
- Expenses – keep a daily log of expenses all year long
- Deductions – be sure to apply for all you are entitled to including: entertainment, travel, meals, capital assets, home office and health insurance
- Traps – be careful not to trigger red flags such has claiming deductions that exceed your income
- Retirement – funds from income paid into a retirement plan are deductible
- Equipment – deduct up to $500K for equipment (if you spent $2M or less); repairs are also deductible
- Payroll – don’t rob Peter to pay Paul; in other words, do not use withheld payroll taxes to finance other business expenses – if you are late or short on payroll taxes the penalties can be enormous
- Insurance – there is a small business health care tax credit for which you may be eligible
- Veterans – tax credits are available for businesses that hire certain unemployed veterans
- Contributions – keep records of all goods, services, and financial donations made to charitable organizations throughout the year
- Help – meet with your CPA quarterly to keep your tax situation in check
Keeping these words handy and your paperwork up-to-date will hopefully reduce the amount of stress tax season brings for many. While taxes, like death and shipping & handling, can’t be avoided, we can at least make the process less ‘taxing’ for ourselves!