Tax season can be a tricky, and probably stressful, time for anyone who has to file a return. This may be truest for individuals who own and operate a small business, especially those with new businesses who are filing as business owners for the first time.
Although the term “tax season” probably doesn’t conjure up the same fond memories and images that phrases like “holiday season” do, there are actually a lot of measures that can be taken to ensure that it goes smoothly and you receive the biggest refund possible. Here are a few tips on making that happen:
Consider a home office. If you have an area of your home dedicated to running your business, you may be eligible for a tax deduction. This could include costs associated with updating or maintaining your home office, including furniture expenses and even a portion of your utility bills. If you don’t have a home office that’s eligible for this type of deduction, it may benefit you to add this space into your home.
Use the cost of pricey healthcare in your favor. Depending on the structure of the business, many small business owners are eligible to deduct the costs of their healthcare coverage.This article explains that this benefit is typically available to individuals who own a sole proprietorship, partnership, LLC or S corporation who are fully responsible for paying for their health insurance.
Keep records of your startup costs, even if they don’t seem relevant at the beginning of your business. Many of these will wind up being deductible, even if they are expenses that were not originally incurred for the business. For example,this resource points out that the computer you use to conduct business in your home office may not have originally been purchased for this role. However, if the computer’s primary function is now to serve your business, the amount you spent buying it may be seen as a startup cost.
Track all of your mileage for business-related traveling. Whether you work out of the house or rent an office space somewhere, keeping track oftrips for business purposes may be instrumental in maximizing your refund come tax time. You may even be able to receive deductions for vehicle-related expenses for the car you use for your business, such as maintenance, repairs and even insurance.
If you’re thinking about starting a business, you may want to consider doing it in a state with a sympathetic tax code. There are several states that don’t have an income tax, and others that cater to small businesses by not levying some of the major tax collection categories on its residents.This resource offers insight into the 10 states with the best tax structure. If you do decide to move to a new state to take advantage of its tax benefits, be smart about selling your house. After all, if you can sell it for more than you bought it, you can always invest that extra money into your business. This article provides helpful tips for homeowners looking to get the most they possibly can for their home and who aim to sell it as quickly as possible.
Running a business is no small feat, and filing returns for it is no exception. But taking advantage of the many deductions available to small business owners can help ease the frustration that often comes with preparing returns. And by following the above tips, you may even find yourself looking forward to filing your return in the years to come, especially if you get a hefty refund check as a reward for all of your hard work!
Maple C. has made a career out of encouraging others to follow their dreams in all aspects of life. Her experience in the business world encouraged her to start her own blog, an inspiration hub for readers everywhere.