In the knowledge that tax time is approaching quite rapidly, it has come to my attention that many business owners do not know what to look for in an effort to prepare themselves to get their tax forms or tax preparation done.
I thought the best tax tips might come in the guise of a checklist that business owners can use to make sure that they are availing themselves of the proper deductions. Keep in mind however, that not all businesses are the same, so there may be certain other deductions that are common to individual industries.
But the most common of those deductions for general businesses follows:
Let’s start with vehicle deductions. Mileage is one of the largest deductions that a small business can take. Right now the IRS is allowing a deduction rate of 55.5 cents per mile. Now, you may deduct the actual vehicle expenses of gas, repairs, etc… however, in most cases the mileage deduction should far exceed the actual expenses. Keep track of mileage by using a simple mileage log that you can buy for very little cost at any office supply store.
Advertising expense – include business cards, website expenses, promotional gifts, online or other advertising expenses.
Contract labor expense – this is for all those 1099 contractors that you may have consulting with your company.
Insurance expense – any business insurance, which does NOT include life insurance or automobile insurance.
Interest on the business mortgage paid.
Legal and Professional services – this includes any attorney fees, court costs or filing fees, accounting fees, or other professional services.
Office expenses – this includes office supplies, things like the water cooler, security systems for the office, and any other direct office expense.
Rent or Lease expense – Any rents paid for the office, any rental or lease on equipment, or other rent or lease expenses.
Repairs and Maintenance expense – Include in this any building repairs and maintenance, as well as, equipment or computer repairs.
Supplies – other supplies that are needed in the ordinary course of business.
Taxes and Licenses – All taxes and licenses and permits that are paid for in the course of ordinary business.
Travel, Meals and Entertainment – the most misunderstood of all expenses – This is for necessary travel away from your home for business and the meals and entertainment that occur during these travels. You must have hotel invoices in order to claim the deduction for overnight stays. You may NOT claim alcohol consumed nor movies watched while away.
Other meals and entertainment expenses that may be claimed include meals with a client for business purposes only.
Utilities paid for the building that the business uses.
Wages – this is the deduction for gross wages paid for all employees of the business.
There are other expenses as well that can be included:
Telephone costs for the business or cell phone if required for the job
Continuing education expenses
If there are other expenses that you feel should be included, make a list and ask you tax preparer if they are relevant to your business.
Well, that is our comprehensive checklist for helping you to prepare for tax time. (Copy and paste onto a word document and print out for your use.)
Gather your paperwork, starting adding everything together, and take it to a trusted tax preparer that has been properly authorized by the IRS by having obtained a PTIN number. Also, remember that tax law states that you must have the signature of said preparer in order for it to be considered a lawful return.
Until next time … remember questions are always welcome.
Are you ready????