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Friday, March 21, 2014

Tax deduction tips for your business

Business tax deductions
Home office & business expenses lower taxable income
By Phyllis Stent

One of the many benefits of being self-employed is the fact that- you get to save on major earnings through tax deductions, which would not be possible if you were in a job! Irrespective of the size of your business and whether, you are a sole proprietorship firm or a partnership enterprise- “You already know that you’re legally obligated to pay your taxes, but that doesn’t mean you should pay more than you owe,” states Nellie Akalp on Mashable.com.  Consulting business tax accountants can help you find out, exactly, how much of your income is really taxable!

Business tax accountants, provide small and medium enterprises with expert advice on the legitimate ways in which they can prevent their earnings from being taxed! Given below are some interesting ‘business tax deduction tips’ offered by experts in the field.  

"Claim home office deductions" say business tax accountants

Ask a group of business tax accountants, if claiming ‘home office tax write-offs’ is a good idea; and, they will respond with a unanimous “Yes!” “Many small business owners are afraid to claim “home office” deductions for fear it will bring the auditor a-callin’. Fear of an audit should never keep you from claiming legitimate deductions. Just make sure you keep well-organized records, and that you can prove your deductions are indeed for business expenses and you’ll be fine,” advises Dave Symmonds on lessaccounting.com

In this context, Richard Eisenberg in a recent article in Forbes notes that: “The Internal Revenue Service (IRS) came up with the optional simplified option “to combat complexity” and provide an easier way to determine the amount of expenses you can deduct for a home office. It estimates the new method will reduce the paperwork and recordkeeping burden on small businesses.”  However, business tax accountants believe, that despite the process being simpler, it will make “tax-preparation more complicated for some,” observes Symmonds.  Still, “Anything that helps people keep more of their money is a good thing,” says Lisa Greene-Lewis, Turbotax’s CPA and among San Diego’s leading business tax experts.

Business tax accountants advise businesses to "plan expenditures and shift incomes"

“Plan your spending. Entrepreneurs typically benefit from minimizing taxes by lowering reportable annual profit. If expenses are due to hit early in 2014, and your business accounts on a cash basis (as many small firms do), it might pay to incur the costs before the end of 2013,” suggests Joseph Steinberg, on Forbes.com. “Likewise, if you are accounting on a cash basis and wish to reduce taxable income for 2013, consider billing your customers late or giving  them an extra-long grace period for making payments, so that revenue that you otherwise would have received in 2013 arrives at your desk in 2014,” he states. Skilful business tax accountants dole out advice in a similar vein, when speaking on the subject.

"Charity donations can reduce your tax burden" claim business tax accountants

Michael Rubin, a Certified Public Accountant (CPA) and financial planner, like many other experienced business tax accountants-believes that, charitable donations can lead to major tax savings! Although your charitable nature surely isn’t solely motivated by the potential for a tax deduction, saving a few bucks on your taxes is a nice side benefit,” he says in an article titled- ‘Save on Your Taxes with Year-End Charitable Giving.’ However, “to make sure you maximize the tax value of any of your planned philanthropy before the end of the year,” ensure that you first know-‘to whom you can make charitable donations; which donations are deductible;  by when you must make them; and that you have the necessary proof to show that you have made charitable donations,’ he advises.

Business tax accountants view "technology purchases and travel costs" to be non taxable

“To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary,” informs the IRS website. “…equipment expenses such as computers, printers, and even company vehicles are tax-deductible, up to a certain amount. Depending on the item, you can deduct the full cost on the year of purchase, or split it between several years,” advises Symmonds. Similarly, business tax accountants also see ‘travel costs,’ to be part of the non-taxable segment of expenditure that a business incurs.  “Since travel can be necessary for business success and expansion, many of the expenses are completely tax deductible. Our tax tip on travel is to write off expenses like airfare, hotel fees, car rental and mileage, and travel expenses like laundry costs,” Symmonds declares.

About the author: This article was written by Phyllis Stent, who believes that business tax accountants can save you a lot of money.

Image license: Ken Teegardin, CC BY-SA 2.0