Tax season is probably everyone’s least favorite time of the year, and with all the work that goes into calculating your taxes, it’s completely reasonable to feel this way.
However, there have always been some ways around paying too much on your taxes, and people have been coming up with numerous ways to save some extra cash every year.
On top of this, the IRS offers several types of tax deductions every year to business owners and entrepreneurs, which reduce both your income tax and your self-employment income tax.
You may also be able to reduce the amount you’ll have to pay by lowering your adjusted gross income, as it may qualify you for education credits and a number of other perks that are available.
We’ll go over some of the best things you can do to save some money during tax season, so keep reading and learn what you can do to keep your finances in check.
The benefits you pay to your employees are deductible expenses that you can use to lower the amount of taxes you’ll be paying come tax season.
A good example is that you can deduct the cost of accident and health plans you offer to your employees, and this can also apply to adoption assistance, dependent care, educational assistance, and many other programs your employees could benefit from.
This way you’re getting the most out of your money while also retaining your employees with the benefits you offer them, effectively getting you the best of both worlds.
If your means of transport is crucial to running your business, then you may be able to use it as a valuable deduction from your taxes, and it’s much easier than you’d imagine.
In fact, every trip to meet with a client, buy office supplies, or drive for any other form of company business can contribute to these deductions, so keep track of all the miles in order to get the deductions you’re entitled to.
There are two ways to do this, and you can choose between using the standard mileage rate to get a general idea of how much you spent on transport or you could keeping track of the actual expenses for driving your vehicle due to business-related reasons.
The IRS will require you to provide detailed data of your business, commuting, and personal miles, as well as the purpose of each and every one of those, and if you’re going for actual expenses, there will be a plethora of other things to keep track of, including gas, oil, service costs, and interest rates if the vehicle was bought with a loan.
Internet service fees
As cheap as it may seem, internet service costs can quickly add up, especially if you’re managing a larger office of employees that require a constant connection to the world wide web.
Thankfully, these fees are also a deductible expense, and a number of other things go into this, from computer maintenance to all the necessary subscriptions and virus control you may have installed on your company’s personal computers.
Take note of each and every one of these expenses and write them all down along with proof of payment, which could potentially entitle you to a deduction later on during the tax season.
Depreciation of business assets
Every piece of equipment loses value over time, and this means that even if your business isn’t exactly losing revenue, you’re constantly bleeding money due to the deterioration of your office supplies and other equipment/furniture that keeps your company running.
If there are any items you didn’t fully expense in the year you purchased them, this means their value has depreciated over time coming into this year, and you may be able to get a depreciation deduction for all of those assets.
Home office deduction
Finally, you may be able to take a tax deduction if you’ve got a home office, although you will have to provide proof that the space you’re claiming is your office is completely devoted to running your business and nothing else.
This doesn’t necessarily mean that you need an entire room dedicated to your business, but rather, only a portion of a room will work just fine, and as long as it’s being used exclusively for business, you may be able to deduct expenses based on the square footage the supposed “office“ takes up in your home.
Tax season is scary, in fact, it’s so scary that many business owners would rather hire a tax professional to do their taxes for them rather than do it themselves.
However, it doesn’t have to be this way, and you could save yourself thousands of dollars by simply employing a few of the strategies mentioned above, and if you pull it off, your wallet and your overall financial security will be thanking you.