Taxes and Bookkeeping will be the key to financial freedom in your Business. If you understand this and take the necessary steps from the beginning, you will save yourself time, money and effort.
There are a ton of deductions a Small Business Owner can deduct on their Tax Return.
Essentially, anything that’s required for your business to run in an ordinary or necessary manner qualifies as an eligible business expense deduction.
Here are a few (not all inclusive):
Insurance Premiums (ex. Health Insurance)
Travel, Entertainment, Meals (ex. Taking a Prospective Business Client out to Dinner)
Equipment and Gear (Necessary to run your Business)
Work at Home Office Tax Deduction (ex. Home Office and Office Supplies)
Subscriptions and Memberships
The Tax Deductions are available to take as long as you maintain accurate Books. Keeping track of your expenses throughout the year will ensure you will claim every tax deduction available for your Business.
Receipts are still required according to the IRS.
Keep track of every receipt, take photos, upload them to your computer or use other Document Storage companies to maintain them.
I personally upload all of my receipts as attachments to my QuickBooks online software. Every expense has an attachment with the actual receipt available to view. If you are ever audited, you have everything you need in one place.
When choosing your Tax Preparer, know their qualifications.
Only Enrolled Agents, Certified Public Accountants and Attorneys can represent you in case of an audit. Small Business Owners are at higher risks of being audited because of the Schedule C deductions. When you complete that Form every year, you are not submitting your receipts. Essentially, the IRS is taking your word for all the business expenses you claimed. If you are ever audited, and your tax preparer does not have one of the above credentials, they are unable to represent you. You will have to go through that process alone and what Business Owner wants to represent themselves with the IRS?
Accounting Software will ensure that all of your income and expenses are tracked. You are able to Pay Bills, Bill others and stay on top of who owes you.
As your Business grows, keep up with the requirements applicable to your Business such as Estimated Tax Payments and Payroll.
Take my advice.
You will thank yourself at Tax Time.