Small Business Tax Tips
Tax Angles for Small Businesses
Looking for tax angles for small business owners? Tax-deductible business expenses can help improve your bottomline. Make sure you understand these tax tips for small business owners and find an accountant who can help you minimize your tax expenses.
Taxes are something that many small business owners don't like to talk about.
You spend the whole year trying to scrape out a few dollars of profit and then Uncle Sam swoops in and takes a big chunk of it away at the end of the year. It can be frustrating, to say the least.
But it might surprise you to learn that Uncle Sam has a good side. Small business owners can discover his good side by taking advantage of the many tax benefits available to small businesses. In fact, by leveraging some of the tax benefits that are available to you, you just might be able to hold on to a little more of your hard-earned cash at the end of the year.
Car Deductions for Small Business Owners
Do you use your personal car for business purposes? If you do, you may be able to claim a deduction for the cost of the business use portion of your vehicle. There a couple of ways this can be calculated, but most small business owners track their mileage and expense it at the I.R.S. rate, which in 2006 is 44.5¢ per mile.
Home Office Deductions for Small Business Owners
Many start-up small business owners operate their business out of their homes. Under certain conditions, you can claim a deduction for a portion of your housing expense. This deduction is based on the square footage of a space that is devoted completely and entirely for business use. If you use the kitchen to prepare meals and conduct meals, you won't qualify for a deduction. But if you use a spare room exclusively for business purposes, then you may realize a sizeable deduction.
Personal Asset Deductions for Small Business Owners
You may also be able to claim the business use of other personal assets such as computers, fax machines, tools, etc. If you qualify for these deductions, you can typically claim an amount equal to the percentage of business use multiplied by the overall costs associated with the asset.
Entertainment Deductions for Small Business Owners
You can deduct entertainment expenses? Absolutely - or at least 50% of entertainment expenses that are directly related to the operation of your business. Qualifying entertainment expenses include things like meals with clients and other activities that you can prove have a legitimate business purpose.
Travel Deductions for Small Business Owners
Business travel is also deductible, but only to the extent that it is used for business purposes. If you take a trip that has both business and personal components, you need to prorate the deduction to account for business use.
It is possible to structure a tax-free retirement plan for yourself that qualifies as a deduction for your business. Your business benefits from the deduction, and you benefit personally because the funds channeled into your retirement are not taxed - at least not until they are withdrawn when you retire.
The best advice for leveraging tax benefits for your business is to consult with a qualified tax professional. A capable professional will keep you out of trouble with the I.R.S. and offer suggestions for deductions you may not have considered.
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