It is almost year-end again and now is the time for small business to understand what tax saving opportunities they have available and to begin to gather information for the accountants. I thought I would resurrect an article I wrote a couple of years ago about tax planning. Here is most of it:
This year I was really nervous about owing taxes and therefore need to be more deliberate about investigating available deductions. I decided I needed to do some homework myself. I purchased a book called
Deduct It! Lower Your Small Business Taxes, By Attorney Stephen Fishman. (Light reading for the holidays.) Actually, it is written in non-technical language so it was very easy to understand. More importantly, I learned about several opportunities for legitimate deductions through my private practice. I will still go through my accountant, but I have questions to ask and can show him the deductions that I researched to ensure I interpret them correctly.
Just to give you an idea, one thing I did not know is that you can claim a home office even if you have an outside office if you do the majority of your business management and administrative work at home. For example, I do all of my website creation, upkeep, articles at home. I do all of my billing and bookkeeping at home. Etc. If you can claim a home office then all mileage, even to your outside office, may be tax deductible as a business expense.
I am not an accountant. I asked my accountant if this is deductible for my business based upon all of the required criteria, etc. So, although I am not suggesting that you do this, I am suggesting that there are opportunities that you may not have considered in the past that can provide real tax savings. I also learned that I keep crummy records making it more difficult and cumbersome to document these deduction opportunities. Since I am not an accountant (disclaimer) I will refrain from giving tax advice or any more examples, however, I would offer the following tips:
1. Do some research on your own. There are many books in addition to the one I am reading to choose from and many on-line resources. This is reading that can actually save you real money.
2. If you see an opportunity for potential deductions, make a list or copy the pages to review with your accountant to make sure they qualify.
3. Most of these books have a chapter or two on documentation. Read those quickly. It is a new year and now is the time to get those systems in place for 2010. Most of this is simple if you start the year doing it.
4. Ask your accountant to estimate quarterly taxes for you based on the past year’s history. It is better to pay most of it as you go then to face a LARGE tax bill at the end of the year.
5. Ask your accountant if you can go back and claim any of these deductions for prior years if they are eligible now.
Here is a link to an easy to read article of small business deductions:
Taxes are not a fun subject but if you own your own business hiding your head in the sand will only be detrimental in the end. There are many professionals out there who are trying to provide us with information in a user-friendly manner. Check some of these out, one idea may save you thousands of dollars!