Small Business Tax Update!
Small Business Tax Update -Now that your corporate tax return or your corporate tax extension has been filed, it is as good a time as any to begin making changes that will save your business tax dollars and make tax record keeping a little easier. The following points highlight some small business tax issues that you may want to consider as you move your business forward.
- The Obvious
Have an organized accounting system that includes entering all business expenses in a systematic and timely manner. Along these same lines, keep personal and business expenses separate. Never overlap the use of business and personal checking accounts and credit cards as it just makes it more difficult to separate expenses at tax time.
- Business Start-Up Expenses
If you are opening a business this year, remember that $5,000 in start-up costs in addition to $5,000 in organizational costs can be deducted on your 2014 business tax return. Any costs that exceed these first year limits can be amortized over the next 15 years.
- Hiring Family Members
Investigate the tax advantages of hiring family members. For example, if you hire your child to do legitimate work for your business, you can deduct the amount of their salary from your business income. Although your child will have to pay taxes on the income if it exceeds the amount of the standard deduction for that year, it will presumably be at much lower tax rate. If you employ your spouse in the business, you can pay his/ her health care premiums and then deduct those premiums at tax time. In addition, the Health Care Tax Credit allows small businesses that pay employee health insurance premiums a tax credit equal to 50% of the cost of those premiums for 2014.
The IRS allows employers to deduct any costs related to the training and education of their employees when the activities are aimed at improving or maintaining job skills. These business tax deductions for courses, workshops, seminars and conventions are also available to self-employed individuals.
- Automobile Expenses
If one or more vehicles are used for business purposes, keep up with the actual expenses of driving and maintaining the vehicles as well as the miles driven for business purposes. This will allow you to compare the amount of the vehicle deduction using both methods to see which will provide your business with the maximum tax advantage. For 2014, the IRS allows a deduction of 56 cents per business mile driven. Depending on the nature of the business and the types of vehicles, this deduction may prove to be greater than or less than the deduction for actual vehicle expenses as determined according to the specific IRS guidelines.
- Employee Benefits
Investigate the tax advantages of providing stepped up employee benefits such as medical, dental and vision insurance and child care assistance as opposed to giving wage and salary increases. Because of such tax provisions as the Health Care Tax Credit, these decisions can result in a decided tax advantage.
Because tax law as it applies to small business is complicated and can be difficult to apply, consulting with a qualified tax professional is often the best course of action for a small business trying to achieve the maximum tax advantage. Such individuals are up to date on all of the various business tax deductions and business tax credits and know how to apply them to the benefit of their clients.
If your business is seeking business tax or business accounting solutions, our experienced professionals can provide you with the expertise you are looking for. Visit us today at www.businesstaxpreparation.com to learn more about our full range of business tax and business accounting services. Contact us by phone at (866) 676-9417 or by email at firstname.lastname@example.org or to receive a free, no obligation consultation.