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,