Tax Season Advice for the Business Owner
Surprisingly to some, tax season does not start on March 14 or April 14. You can and should get an early start on your taxes. Once you decide to meet with your tax advisor and get started, here are some tax tips for the business owners out there.
- Understand that your business structure affects taxes.
Filing as a sole proprietor or single member LLC allows you to file on Schedule C of your personal return and requires that you pay self-employment tax. Forming a corporation or an LLC with an S-Corp election might help reduce self-employment taxes, but requires an informational business return due by March 15.
- Understand what you can deduct in your home office.
To qualify as a home office, the space has to be used solely for business activities. Also, you cannot have another office available. Under the simplified method, you can take $5/square foot on up to 300 square feet of space. You can also deduct a percentage of home utilities, such as: gas, electric, internet, etc. Finally, always remember to expense supplies like paper, toner, pens, tablets, etc.
- Do you travel for business?
Do you attend conferences, tradeshows, or travel to meet with clients? If so, track your travel and lodging to deduct. Also, you can deduct 50% of meals.
- Mileage deduction?
If you travel to meet clients, perform a job, purchase supplies, or for any other business activity, you can deduct.
- Is health insurance deductible?
For those of you who are self-employed, health insurance is deductible if you are not eligible to participate in an employer subsidized plan.
For many small business owners cash flow can be tight, and you are trying to plan for the present and future. Stashing away money in tax deferred retirement plans is a great way to lower taxes and save for the future.
If you are a privately held business owner, either experienced or just starting out, you should have a tax advisor you can talk through these subjects with. It is important to have a relationship with an advisor and if you are looking for someone to talk to about these issues, please reach out to us at Elias Strauss CPAs.