Small Business Tax Tips

Tax Tips for Small Business Owners

Russell Fox’s Las Vegas based company, Clayton Financial & Tax, prepares returns for over 900 small business and individual clients annually. Fox is an Enrolled Agent and the author of a new book, Tax Strategies for the Small Business Owner.  Enrolled Agent status is the highest credential that the IRS awards and allows certified individuals to represent the taxpayer before the IRS.  In his book, Fox offers the following tax tips for small business owners and the self-employed:

Using a Professional:

 Although individuals with simple returns and no deductions might want to take advantage of the free software offered by the IRS to prepare their own returns, small businesses often require professional help.   Business returns are more complex because they have impediments such as depreciation, business expense deductions and income from pass- throughs. In addition, self-employed individuals, sole proprietors, partnerships and S-Corps must submit Form 1040-ES and quarterly estimated payments if they expect to owe $1000 or more in taxes. An added incentive to businesses for using a professional tax preparer is that the cost of the services is tax deductible.


It is in the best interest for all parties if you come prepared by having the number-crunching already done.  Use records from previous years’ returns as a preliminary point and fill out as much as possible in advance. It is also a good idea to bring in copies of your federal and state returns for the last three years if you have a new preparer. Business tax preparation is key!


Documentation such as partnership or corporate returns, W-2s, 1099s, and Schedule K-1s are some of the essential documents needed for tax preparation. Also bring in your business’s income statement, balance sheet, and receipts of fixed assets purchased in 2012. Children in college can qualify for an American Opportunity refundable tax credit of up to $2500 for qualified education expenses.


Home office deductions can be taken if the home office is used solely for business. If this is the case, keep track of expenses such as mortgage, utilities, homeowners’ insurance and maintenance.  Similarly, keep notes of your business miles, repairs, fuel costs and oil changes if you use your personal vehicle for business purposes.  If the vehicle was purchased in 2012, keep the sales receipt because the state sales tax may be deductible from your federal return, contingent on where the business is located.

Retirement Accounts:

The contribution limit for an IRA is $5,000 for 2012; $6,000 if you’re over 50. The SEP-IRA plan allows for contributions of up to $50,000 for 2012, or 25 percent of your total compensation.  It helps to understand the different types of accounts because certain retirement plans such as a traditional IRAs or SEP-IRAs allow the taxpayer to make prior year contributions. This can reduce tax liability and may exemplify the largest dollar amount change to your tax return that can still be done today.


According to Fox, refunds should be distributed in the standard 10 to 21 days after a return is processed despite the sequestration-induced cutbacks.  He claims that the IRS will not make any changes with personnel until after the tax season is done. The refunds received by taxpayers in 2012 are expected to average around $2700. The IRS also offers the “Where’s My Refund” tool on their website to allow taxpayers to check the status of their refund.


If your business in seeking any type of business tax or business accounting services, our experienced Certified Public Accountants and Enrolled Agents and tax attorneys can provide you with the help you need. For more information about our full range of business tax and business accounting services, visit us today at

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