Tax season is upon us, and you might be making some last-minute tax preparations. Small businesses and freelancers have extra steps that they need to take to ensure that they pay the least amount of taxes possible, but you might want to know exactly where you can get a few more deductions and how you can complete your taxes in the most efficient way.
Moxie Bookkeeping & Coaching doesn’t prepare income tax – we do management accounting, not tax accounting. This means we help you get and stay organized throughout the year so that tax prep, whether you DIY or CPA, is smooth and easy. If you don’t feel ready, here are a few tips to help you feel much more prepared (and maybe call us to help prevent this stress!)
Use Tax Software
Many businesses lose money every year, sometimes in significant amounts, simply because of incorrect or inefficient tax planning and execution. Filing manually is more confusing and less efficient than using tax software. TurboTax and H&R Block are easily two of the most well-recognized tax software programs available on the market, and they both have features that are designed for small- to medium-sized business owners.
Take the Home Office Deduction
Some business owners are shy about taking the home office deduction, but you should feel confident about it. This tax deduction allows business owners to deduct $5 per square foot for a maximum deduction of $1,500 on the simplified home office deduction, and it’s especially useful for artists and other freelancers who need a large workspace – but be sure you understand the stipulations that allow you to take the deduction. The space must be used *exclusively* for business.
Remember Other Deductions
Depending on the type of business that you own, you could have other business deductions that could save you huge amounts of money. For example, if you need a car or truck for work, you can deduct your mileage. And if you collaborate with independent contractors, you can deduct the amount that you pay them. The cost of rent is also deductible, whether it’s for a storefront or office space. If your business is very new, it might not feel like a small deduction will be worth it, but several small deductions can make a big difference in the long-run.
When you own a business, taxes can be much more complicated and stressful than when you’re working for a company that withholds earnings for you. If it’s your first year as a small business owner, you’ll want to make sure that you have everything set up well in advance so that you don’t miss out on big savings.
Sometimes having someone else do your taxes for you is the best choice. Whether because you’re busy and want to focus on your business, or because you just might not be the best at balancing your books yourself. For those times, let Moxie Bookkeeping & Coaching refer you to one of the great CPAs we work with!