If you have gone into business for yourself in the last year, you might find the upcoming tax season incredibly scary. Not only do you have to worry about filing taxes correctly, you also worry about getting all of the deductions that you deserve for the business. The best way to handle filing your taxes that will give you peace of mind is to find a tax preparer that specializes in first year business taxes. Larry Gurewitz can help your small business at tax time. He understands the many credits and deductions that small businesses can take advantage of, and he can help your business too!
One of the biggest fears of a small business owner is to leave money on the table. On the flip side, there is also the fear of raising a red flag towards an audit. When you find a tax preparer, they will walk you through the process of finding the correct forms for your business.
The right forms will be determined on how your business is structured. If your business is a partnership, then you are most likely going to use Form 1065. If your business is a sole proprietorship or an LLC that is treated like a sole proprietorship, then you need to complete a Schedule C form that is attached to your personal income tax return.
The IRS website offers break down tables that detail the necessary tax forms for each type of business, including LLCs that are treated like a corporation and S Corporation status. It is in your best interest to find a tax preparer that specializes in tax filings of small businesses to help you through this process.
A hurdle of many small businesses is trying to classify what is considered an equipment expense and what is considered a supply expense. Typically, higher-value items are considered equipment, such as computers, scanners, furniture, and other items that can last longer than one year. There is a specific form for the Section 179 deduction, which allows you to take a write off for the entire cost of new equipment purchased in one year. This is beneficial because otherwise you would have to take many years and calculate the depreciation value for each year.
Items that are considered supplies are items that you use for your business throughout the year and have a shorter life expectancy, such as printer ink, paper, pens, and receipt books. When you find a professional tax preparer that specializes in small business taxes, they will help you add up all of your qualified purchases to ensure that you receive a greater deduction for your small business.
Part of being a small business is that you need to beat the street in order to find new clients and to market yourself better than your competition. This often requires travel to meet them or driving to take a client to a dinner. If you are able to keep track of your mileage and the cost of travel throughout the year, you may be able to deduct some of the cost of travel. As smart phone apps are adapting to fit the needs of all people, there are some apps that will keep track of your mileage for you. When you find a tax professional, they will ask you to compile this information for a qualified deduction.
Believe it or not, the items that you are required to have such as insurance that are related to workers’ compensation, property insurance, and liability insurance, can be deducted on your taxes. They are considered a business expense. The rules for these type of deductions vary by business type. Your tax preparer will help you find the deductions that best fit your particular business type.
As an example, business owners of S Corporations, partnerships, and sole proprietorships are able to deduct insurance premiums paid for dental and medical for themselves and their immediate family members. Some business may be able to receive a tax credit for health insurance that they help pay for with their employees.
There is a rumor going around in the small business world that if you take a home office deduction you are basically asking for the IRS to audit you. However, if you legitimately qualify for a deduction then you should work with your tax preparer to take that deduction. Qualifying for a deduction means that you have a dedicated space in your home that is solely for use of the business and nothing else, and you need proof of this fact. There are two different methods for calculating this deduction, work with your tax professional to find the deduction that best fits your needs.
Larry Gurewitz is a tax professional with years of experience in Los Angeles, CA. He can help your small business take advantage of all of their available credits and deductions correctly. For more information, click the profile link below, or use the Contact button to get started.
Larry Gurewitz