Did you start a business in 2017? It’s time you write off the expenses.
If you are a new business just getting started, business proprietors need to understand that you are able to write-off all associated expenses even if they happened before you actually flipped the light switches on and turned your OPEN FOR BUSINESS sign around. Make sure you also do not ignore these vital deductions. To learn more, check out Writing Off the Expense of Starting A New Business.
Accurate record keeping
This is a common problem for small businesses and often leads to missed business opportunities for reducing your taxable income for the year. Make sure your expenses are accepted, tracked and reinforced using receipts (the IRS demands it). Spend time every week to review your records– receivable, payable, credit card transactions, cash flow, etc. if your company is growing, think about accounting applications (that integrates all your financial transactions and ventures in one focused dashboard) or retain the services of an accounting professional.
A great deal of confusion exists regard this aspect because it can be quite confusing. What constitutes a legitimate business driving deduction. Bolingbrook Tax prep and CPA; Mike Ramirez explains how much of this works. “Lots of my clients will ask me exactly what can you get away with deducting in regards to business driving? “Let’s say you travel from your office to see a customer or partner, this establishes business driving. Now whether or not you are travel from your home to another location and if that counts as a business trip really does depend. Are you travel from your residence to your office round-trip? This is considered a nondeductible personal expense. But what if you happen to work from your home office that you are also claiming as a tax deduction? If that is the case then you can consider traveling from your house to a business destination as business driving which can be deducted.”
Do not exaggerate your deductions
Your certified tax professional can make sure you do not overdo or overestimate your deductions– a specific thing that can elevate the possibility of an IRS audit. Such as, many business owners will often believe they are able to deduct all of their meal expenses when they travel or even gifts they give to client as perks. This is absolutely incorrect as much of these expenses are not completely covered.
Also, if the ration between the amount of expenses are much higher this fiscal year than the previous, and are atypical of your industry, you can expect the IRS to come calling.
It’s not all about the IRS
The IRS is a single piece of the tax pie; don’t forget about your other tax obligations such as property and all other associated taxes. An audit is never a good thing.
Separate personal and business
Intermingling your personal and business bank accounts is a big cause of confusion and issues around tax time, which only exasperate the problem of tracking income and expenses. Do not forget, if your business operates our of your residence, be sure to keep that area as a completely separate entity away from the common areas of your home to be sure you can deduct such properly.
Payroll mistakes can be costly
Compliance with both federal and state payroll tax codes can be a real pain for many business owners which the consequences of screwing up can turn around and bite you. In order to ensure payroll taxes get deposited in the proper account, it is better to have a 3rd party handle this for you. Trust us. The cost of doing It properly are far less than what it will cost to fix it.