Tips for Filing Your Small Business Taxes

Posted on January 5, 2016

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Start Preparing Your Small Business Taxes Now/

small business taxesAs you get rolling in the New Year, it’s time to start preparing your small business taxes. While it may seem that there’s many weeks until your tax return is due, you’ll want to be thorough in your preparation to ensure that you are not missing any documentation that could lower your tax bill or help you avoid an audit.

Here are some tips for preparing your small business taxes:

Determine which forms you need. Depending on how your business entity has been designated, you’ll need to use different forms. A partnership files a return using a Form 1065, while a sole proprietor will record business income and expenses on a Schedule C, which is then carried over to Form 1040. If your business is a corporation, or you have decided to treat your LLC as a corporation, you’ll need to file a separate tax return.

Take the home office deduction. This deduction has been a complicated calculation in the past, and many taxpayers have feared that it draws the eyes of the IRS, but it can provide a significant savings on your small business taxes and the calculation has been simplified. If you have a dedicated space for your business in your home, then you can deduct five dollars per square foot of the space on your tax return.

Classify your office equipment. Many small business owners get confused when it’s time to decide which purchases count as supplies, and which as equipment. Supplies are items that you use up during the year, like paper and printer supplies. Equipment purchases are higher-cost items that have a life longer than the tax year. The total cost of your equipment can be deducted under Section 179, but talk with your accountant about whether to take this deduction or do a depreciation schedule.

Deduct your insurance costs. Whether it’s malpractice, workers’ compensation or property insurance, be sure to include it on your small business taxes. If you are a sole proprietorship, a partnership or an S corporation, you may also be able to deduct medical and dental insurance on your tax return.

Document your travel and entertaining expenses. You can deduct 50 percent of the cost on your tax return if you take someone for a meal and the purpose of the meal is business, or if a meal directly precedes or follows a meeting. For travel, you can deduct 100 percent of the cost of the trip if the expenses are solely used for business. For instance, you can’t take a weeklong trip for a two-hour meeting and write off the whole trip. It’s important to make notes on receipts about who you were with and what you discussed so that it’s easy to determine which receipts can be deducted on your return.

When it’s time to prepare your small business taxes, call on Bert Doerhoff, CPA and the staff at AccuBiz. We work with small businesses like yours every day, and we can help you navigate the intricacies of small business taxes. Whether you’d like guidance on specific forms or if we can complete the entire return for you, let AccuBiz take the stress out of tax preparation.

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Posted in: Small Business