It’s getting to be that time of year again. Almost all of us have deadlines looming from our friends at the IRS. If you’re running a sole proprietorship, you’ll need to file by April 15, just as individuals do. For corporations that report on a calendar basis, your tax-filing deadline is even sooner - March 15. So of course, business owners are scrambling around, looking for receipts, and trying to get their books in order, all in the hope that they don’t end up paying more to Uncle Sam than they need to.
Here are some tax filing tips for your business, that should help you prepare for the dreaded filing dates.
Gather up all your records.
I know you keep records all year long. But if you’re like most business owners, you’re overbooked and spread too thin, and some things fall through the cracks. So, at this time, make sure you have all your records - receipts, invoices, bank statements, payroll records - in short, anything related to your business’ finance, at your fingertips. This will make it much easier for you to complete any forms, or discuss them with your tax preparer.
Claim your home office deduction, but do it properly.
If you’re running a small business, we know you do some of your work at home. A lot of our work gets done outside of the office. But many business owners are afraid to claim a deduction for their home offices because it’s widely believed that this could trigger a much-feared audit. And indeed, so many people used to fudge the numbers on this one that it became famous as a red flag for audits. But if you’re legitimately using part of your home to do business, you shouldn’t fear claiming it. Just make sure everything is well-documented, and that you use a distinct space in your home, apart from the living area. If your “office” is also your kids’ toy room, you’re going to have a hard time backing that up if it’s ever questioned.
Claim your travel expenses.
Lots of people want to be in a business that requires travel so that they write it off to the business. If you’re genuinely traveling for business purposes, you can claim deductions for most of the expenses directly related to the trip. These include airfare, hotels, and car rentals. Another tax filing tip about travel is that you can feel free to bring your family along. Having them on the trip doesn’t take away from your ability to claim it, but you won’t be able to deduct their expenses.
Small deductions add up to a lot.
Sometimes “miscellaneous” expenses seem too petty to be worth keeping track of, and for many businesses, a lot of these slip through the cracks. But over the course of the year, lots of little expenses add up, sometimes to a very significant sum. Some expenses that you might overlook in tax filings are books or other publications you may buy to stay current in your work, interest you paid on credit used for business purchases, or online courses you took. Don’t forget other little expenses either, like postage stamps, your Internet bill, ink for the office printer, and so on.