Small Business Digest Header Icon   •    •    •    •    •    •    •  
Small Business Digest


  
    July-2014
 
HOME CURRENT ISSUE SUBSCRIBE FREE RSS NEWS FEED SAMPLE NEWSLETTER BUSINESS RADIO ARCHIVES
 
   

Five Tips For Completing The Most Beneficial Tax Return

For small-business owners, finding tax deductions that pass an IRS screen is crucial to minimizing levies.

However, small businesses have many tax options and deductions available to them—and the sooner planning for taxes start, the better off entrepreneurs will be.

BizFilings, an online incorporation and a supporter of small businesses, offers these five tips for maximizing your deductions and making filing taxes more of a cakewalk than a headache:

  1. Get organized. In the hectic life as a small-business owner, taxes can seem foreign and daunting. Take steps now to get ahead by organizing your receipts, records and tax documents. Be sure to save all pertinent information you receive in the mail—such as 1099 forms, W-2s and other documents. Organization can be very helpful when asking a tax professional to help file your tax return, as he or she will be better able to define relevant deductions.
    Getting home-office deductions organized is also important. Home-office space that’s used strictly for business (no personal use allowed) can allow entrepreneurs to deduct rent, utilities, improvements to the home, and more for this designated area—but requirements are strict. It’s important to know the exact square footage of the space used as a home office, as well as the total square footage of a home. A tax official can help determine the tax-deductible amount of expenses based on these facts.
  2. Make sure to fill out the right forms. Filing taxes isn’t a one-size-fits-all opportunity. Different business formations, accordingly, will file tax documents unique to their entity type. For example, a 1040 individual income-tax return must be filed by an LLC, a C corporation or an S corporation but each of those business-entity types require additional distinct forms to be filed. BizFilings has created a business-type tax-comparison chart (located at http://www.bizfilings.com/learn/taxes-business-types.aspx) to detail which forms are required for which formations, as well as the different benefits and considerations that each business formation provides.
    “It’s true that there are many different tax advantages to different business structures,” says Karen Kobelski, vice president, small-business sales, service and digital marketing of BizFilings. “What’s important for entrepreneurs is to form the business entity that will serve them best—both at tax time and beyond.”
  3. Stay on top of the tax updates that affect your business. This year, the IRS is introducing the 1099K, a form that documents the gross amounts businesses paid by credit card, electronic transfer or via online merchants like PayPal. These forms will be sent in the mail to appropriate businesses, but entrepreneurs who don’t receive the form may want to check with the IRS and determine if the 1099K is needed. For more updates and changes, entrepreneurs can visit the IRS website.
  4. Increase contributions when possible. Though the calendar says 2012,  actions still can be taken to affect 2011’s taxes. Small-business owners who haven’t already done so can still consider contributing to an IRA (either traditional or Roth). Contributing to a traditional IRA can lower your taxes, and the contribution in the retirement account will compound tax-free. The maximum IRA contribution for 2011 is $5,000.
  5. Use a professional to make sure you receive all the benefits and deductions that you deserve. Above and beyond those in these tips are often deductions that are easily overlooked—such as business gifts, office supplies, parking, postage and even taxi fares. It also may be best to consult an accountant who is familiar with small-business taxes and can help you get the most out of your tax return.


© 2014, Information Strategies, Inc.
P.O. Box 315, Ridgefield, NJ 07657
201-242-0600