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How Small Businesses Can Simplify Taxes & Save Money

By: Maria Werner-- 2016-01-20 10:39 am --

Tax season is perhaps the most dreaded time of year for small business owners. In addition to the innumerable odds and ends of running your business, now you are inundated with financial responsibilities that are often needlessly complex and tedious. When it comes to filing taxes, most small business owners have two primary aims; to save money and to complete the taxes efficiently. Here are some tips to simplify your tax season and gain as much savings as possible.

Deductions There are a lot of deductible expenses that some small business owners are completely unaware of. Be sure to deduct all of these expenses, so you don’t pay more taxes than needed.

  1. Deduct your home office. If you conduct some of your work at home, your home office may qualify as a deductible expense. Be cautious, however, as in order to qualify, your home office must be a dedicated place of work and nothing else. If the office is used by your entire family or if it doubles as a guestroom, it doesn’t qualify as a deductible expense.
  2. Deduct all furniture and equipment. All of the equipment and furnishings in your office qualify for deductions, provided they are necessary to the job. For instance, having a personal coffee machine in your office is handy, but nonessential, and cannot be deducted. A coffee machine that’s for customers, on the other hand, is considered a workplace appliance and can be deducted.
  3. Deduct all office supplies. Retain all receipts for office supplies throughout the year, since every supply used at your workplace can be deducted.
  4. Deduct your mileage. The amount that you drive can also be a deductible expense, but you need to retain meticulous records of mileage and gas payments. Your commute to and from work doesn’t count, but any job-related driving by employees can be deducted.

Tax Credits A lot of businesses are eligible for additional tax credits, which can make your savings even greater.

  1. Work Opportunity tax credit: The government likes to reward businesses that employ individuals from high-unemployment By employing those with developmental or physical disabilities, veterans, and other demographics that experience high unemployment, you can qualify for additional tax credits.
  2. New Markets tax credit: This tax credit is intended to incentivize economic development in low-income areas. By opening a business in an eligible low-income area, you can qualify for added tax savings.

Planning for Next Year There are some policies you can implement now that will considerably reduce the time spent filing taxes next year, while boosting your potential for savings. Here are some key things to consider.

  1. Save every receipt. Keep a file of all loose receipts of work-related expenses throughout the year. This will not only save you time come tax season, but it will also ensure you receive all of the deductions you’re eligible for.
  2. Make an end-of-year donation. When small businesses donate, it not only reflects positively on the company, but it also provides yet another deduction for your business. Keep records of all business donations throughout the year. Monetary donations and donations of supplies both qualify. When upgrading to newer furniture or electronics, consider donating your old items to a nonprofit or thrift store, as those donations can later be deducted on your taxes.

The key to a fast and easy tax season is maintaining meticulous records of all expenses throughout the year. This will make your accountants job easier, while ensuring you receive all of the deductions you qualify for. Also, look into all potential tax credits, as many small businesses are eligible for additional savings. To save more money throughout the 2016 fiscal year and reduce your overhead costs, purchase your office supplies in bulk from a wholesale retailer. Remember to save all receipts, whether paper or digital, so you can deduct them on next year’s taxes. Click here to explore a variety of bulk office supplies at incredible bargains, and begin saving money today.