Three Tax Tips for Small Businesses

Take full advantage of your deductions 

The Internal Revenue Service has built several points of relief into it's tax code for small businesses.  Every opportunity to reduce your tax liability and potentially save a penny or two cannot be taken for granted.  With that said, it is important to take full advantage. 

  • For example, educational expenses, paid to strengthen skill sets applicable to your present employment, are deductible.  This includes courses and seminars.  

  • Another example are the costs associated with launching your business.  These costs, up to $5000, are deductible. 

  • There are several common deductions that can be found here.

Keep meticulous records 

Taking advantage of deductions is great...until you get audited.  Avoid the angst of being audited by keeping records of everything, especially documentation tied to deductions.  For instance, if you intend to take advantage of the mileage deduction, keep a log of your odometer for every business trip taken.  Smartphone users can supplement a log by taking a quick picture or download apps like Everlance or MileIQ.  Receipts can also be captured using DocScanner and stored on the cloud for easy access.  

Don’t co-mingle business and personal expenses

Simply put.  Failing to separate your expenses will make for a mess that no one wants to clean up.  Establish a separate account and line of credit for your business.  A great place to start can be your primary banking institution.  Your history with them may open doors that aren’t presented to you by other institutions.  Additionally, it streamlines your overall banking situation, which should save you some time.