Greg Jones is CEO of BookKeeping Express, a national franchise that helps entrepreneurs manage bookkeeping.
As most small-business owners are on their own when it comes to filing taxes, it’s understandable why it may be difficult to tackle before the pressure of the looming deadline sets in. But, with less than two weeks before tax day, it’s time to kick it into high gear – no more time to procrastinate. The good news is that there’s still time to work the tax code to your advantage.
Organize and Maintain Records
Hopefully the 1099 reporting requirements implemented last year helped you maintain ongoing bookkeeping, the number one piece of advice to ease stress. Though it may seem obvious, adequate record keeping can help substantiate income, expenses and deductions. Find a way that works best for you and is easily sustainable throughout the year.
E-file for Free
Taxpayers making $57,000 or less may be eligible to use free tax preparation software and electronic filling. The software completes the forms from a series of questions that allow you to input your information. Those making in excess of $57,000 can e-file for free using free fillable file forms, which provide the forms, but do not include the tax preparation software
Claim Deductions
Take note of business expenditures that qualify as deductions:
Start-ups: The costs of launching a business are considered capital expenses, and you may deduct $5,000 in the first year in business.
Business-related education: Deduct educational expenses that maintain or improve skills required in your present employment, i.e. seminars, classes, convention fees.
Driving: Commuters may have missed the news that the fiscal cliff legislation signed by President Obama contains a provision that allows employers to offer up to $240 a month in tax-free benefits to employees who use public transportation or a van pool to get to work. That’s an increase from $125 a month under old IRS rules. Employers can get a tax deduction by providing the Commuter Choice benefit or can save on payroll taxes by allowing employees to use pre-tax dollars to buy transit passes or pay van pool costs. Employees save on federal income taxes.
Working from home: Not only does a home-office allow you to work in pajamas, it also makes you eligible for home-office deductions. As long as the designated “office” space within your home is used exclusively for business purposes, you might be able to deduct a handful of things ranging from a portion of your rent and utilities to internet costs and repairs.
Self-employed health insurance deductions: Self-employed health insurance deduction is one of the most significant deductions you can take as a small-business owner. You maybe qualified to deduct premiums paid on qualified long-term-care insurance, medical and dental insurance not only for yourself, but for your spouse and dependents that are under the age of 27.
Software and subscriptions: The recently increased Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased.
Hotels and meals: You might as well stay in a nice hotel, because the entire cost is tax deductible. Likewise, the cost of travel — air, rail or auto — is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy). The only exception is eating out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz and eat at Wendy’s.
Greg Jones is CEO of BookKeeping Express, a national franchise that helps entrepreneurs manage bookkeeping.
Source: http://www.cnbc.com/id/100613275