Tax season has passed. (thank God) But the life of an entrepreneur is not seasonal. In the infancy of any business, the accounting and management of the company’s finances can be the make or break component.
Here’s a couple of tax exemptions to keep in mind for the coming year. Obviously, doing something for a tax deduction isn’t good business sense, but it seems smart to add to your action items if you’re just getting started.
PLEASE NOTE: Obviously I cannot give you tax advice but I can tell you some of the things that I personally do:) Please consult a CPA before making any tax decisions! I always like to know what the parameters are and usually err on the conservative side. The last thing you want to do is attract the ire of the IRS by setting off their pretty little red flags.
Home Office: If it’s a room for storing the rusty Bowflex you can’t seem to get rid of, and the kids softball gear, that would be a “no.” But if it isn’t, glory be! I personally write of a portion of my mortgage, utilities, rent, insurance, etc. Talk to your CPA about this one… it’s a biggie.
Gifts: Sending your sponsor a nice bottle of scotch? (hint) This can be included up to $25 bucks per gift. (It adds up.) Again, check with your CPA to see how laws in your state, province, or country rule on this.
Legal and Business Expenses: Setting up your LLC, filing with the state etc. I write it all off.
Travel and Meal Expenses: I save all receipts from meals that are business related. My accountant like me to write the name of the client and nature of the meeting on the top… I stuff these in my wallet and collect in a shoe box in my office in case the tax man wants to see them. I also deduct mileage, tolls & parking fees. (Track the odometer start and finish for each trip) where your going and why. I always err on the low side and never try to push the limits with travel deductions. This is one thing the IRS looks at closely as there are a lot of people working the loop-holes.
Philanthropy: Goodwill. Red Cross. I always save the receipts and hand over to my CPA at the end of the year. With the tax bracket I am in (close to 50% all included) a $1000 donation to the Red Cross is really only costing me $500! Give away, and give often! Here are some of my favorites: https://jaykubassek.com/causes
Software: Adobe, Dreamweaver, Photoshop, Mac software, whatever. Save your receipts… Even magazines (online or otherwise) can be included.
Cell Phone, Internet service, Land Line (Skype): If it’s used for your business, it’s PARTIALLY deductible. (Only the portion used for business purposes.)
Loan Interest: If it’s from a relative, well I can’t help you with that one:) you’ll have to make sure it conforms to IRS (or your local governments) rules.
I find that if I do the little things throughout the year, it saves me a heck of a lot of time at the end. Not to mention the bill from my accountant is less painful. Needless to say, I rest assured that I am not OVER paying as a result of laziness on my part.
Again, please be sure to get yourself a good CPA to consult you on this stuff. As an entrepreneur, this is just one of the many little annoyances you will have to tolerate.
All the best,
Jay Kubassek
Thank you Mr Kubassek. I am a new,new, new,newbie only income $985.00 a month from a VA pension. I will do what it takes to have this change my life. I thank you so much for this.
Thank you for bringing taxes up now! I never start to think about it until the year is winding down, and then I spend the next few months searching high and low for proof of deductions I am entitled to. And every time I say I’m going to start keeping better records next year. Now it is already June, and I’m starting to see receipts floating around! The time to get ready for next tax season is now, and I’m setting a new weekly reminder – file tax receipts!
Thank you for this professional guidance.
It has come at the right time for me, especially, to set my books in order for the next tax season.
This is excellent information. My local accountant has saved me thousands (over $6k this year alone) by showing me what I can and cannot expense and by helping me structure my home office. What a time saver and business saver when starting out. I will definitely pass this information along to my team. Thank you for always being an inspiration and a leader, Jay. It was fun meeting you in Vegas.
Jay,
Thanx for the tips, but I have one question. With your Home Mortgage, if you write off a portion as home office, once you sell the home according to my CPA that portion written off over the years is included in your capital gains. Did you here the same thing – your thoughts.
Thank you for your time and consideration.
A Newbee
Jay … although we have not met, I consider you a trusted friend, and will refer to this Post often in 2010
It’s interesting that I identify with you in a growing number of ways … in fact, just this week I selected you to be on my “virtual Board of Directors”.
Live well, live blessed, SRM
nice post. thanks.
Thank´s Jay, for all your valuable advice concerning an neccesary part of the business. That shows how much you care of all entrepeneurs wellbeing around the world. I feel glad and want to make a good, honest job in your community.
Yeah, that´s great information. Even though I´ve been doing this for several years now, there are some expenses I didn´t include. So I might have to go and have a talk with my accountant NOW.
Thanks for the tips. BTW, happy birthday. Feliz Cumpleaños.
Nicolás Laverde
Great tax tips thanks Jay,
Also good to claim as a business expense is the travel and cost of the MME and Wealth conference 🙂
This is a totally legitimate business expence!
All the best to you and many thanks for all that you do.
Mike
Here we call it tax rebate. Yes it requires discipline honest and integrity if you want to avoid red flag from IRD.
I save some money by claiming business expenses from land rates, electricity,travel and leisure,house content insurance and many other expenses related to my business. I have contracted an accountant that does all the work for me… because it takes away your time adding up receipts etc.
Thanks for sharing and the tips….