As a business owner, it’s tough to remember everything you’re supposed to know without making mistakes. And if there’s one place you don’t want to make a mistake, it’s with the IRS. The IRS takes small business taxes very seriously and won’t take kindly to apologies or errors should you mess up. Here are five important things you need to know.
- Different Deadline This Year
While the deadline day for taxes is traditionally April 15, this is one of the years where the calendar doesn’t quite cooperate with tax season. Emancipation Day actually falls on April 15, which means the deadline in most states gets pushed back to April 18.
If you’re a Maine or Massachusetts taxpayer, you don’t have to file your taxes until April 19, since Patriots Day takes place on the 18th. Frankly, you should always aim to have your taxes complete before the calendar even hits April, but do note these dates in case you’re holding off for some reason.
- Pull Out Those Receipts
If you’re like most business owners, you fully intend on saving receipts and deducting major purchases for the business. However, it’s amazing how many business owners keep such good records and then totally forget to turn these records over to their accountants.
Locate and carefully review these records. Identify any items that can be depreciated or deducted and use these to reduce your tax liability. In many cases, they can make a significant difference.
- Don’t Throw Away Those Docs
As soon as you file your tax return, you may be tempted to throw away all of those cumbersome documents. But you’ll want to hold off…for seven years. Yep, that’s right! All documents and receipts you use should be kept for at least seven years in order to provide protection should any issues arise in the future.
The best approach is to actually file your taxes online – using a service such as TurboTax or H&R Block – and upload all documents you use to a cloud storage service so that you don’t have to worry about losing track of information or taking up physical space. Plus, when you file online, you never have to worry about tracking anything down. If you ever need anything, just log into your account and click the handy “print” button!
- Personal Reminders
Do you run any or all of your business out of your home? If so, you may be able to deduct things like mortgage interest, utilities, insurance, repairs, and depreciation. If you have a corporation or partnership, you can also deduct expenses from your vehicle and depreciation – which can add up to a sizeable amount in some cases.
Also, don’t forget about your home office. Even if you work primarily out of a corporate office, you can still deduct your home office – as long as you can honestly say it’s used solely for business purposes. This means it can’t double as the kitchen table. Here’s a quick refresher on some of the new rules and procedures for home office deductions.
- Entertaining Clients
Do you spend a lot of time entertaining clients, or wining and dining prospects? If so, you can deduct some of this. There are some caveats to remember, though. You’re only allowed to deduct 50 percent of the meal – not the entire thing. You’re also going to throw up some warning signs if you try to expense a $400 bottle of wine.
The key here is to save all receipts and make copious notes. A simple strategy is to always save receipts and then write down the name of the client, date, and a couple of things that were discussed on the back. This will allow you to recall the meal should it ever come into question.
Be a Smart Business Owner
Owning an online business isn’t always as easy as people like to think. When tax season rolls around, there’s a lot to consider and think about. While these five tips certainly don’t give you all of the information you need to know, they can get you pointed in the right direction.