Smart Tax Moves For Entrepreneurs

On April 7th, 2016, posted in: Accounting by 0 Comment

The U.S. Small Business Administration estimates that entrepreneurs “collectively face an average tax rate of 19.8%.” That is not small change for a small business owner. It’s too late to change your business model to save money on your 2015 taxes, but you can implement changes that could reduce your effective tax obligation in 2016.

There might be missed opportunities you can take to lower your business tax bill whether that includes tracking the miles driven for business to keeping track of all of income and expenses. Here are some moves you will want to talk with your accountant about if you’re looking to save money on the IRS bill.

  1. Business and personal finances need to be separate. It’s easier to track income and expenses for your business if you use a separate business account. Additionally, if you’re audited you need to prove you’re not co-mingling your funds. Go to the bank and set up a separate account for your business.bookkeeping
  2. Record your expenses as they occur or snap a photo of the receipt and send it to your bookkeeper. Be sure to include an explanation of what the expense was for. Tossing receipts into a shoebox and addressing them six months later could lead to accounting errors. Carefully tracking business expenses will also assures you’re on track with your business spending. If you don’t know what’s coming in, what’s going out and where it’s going, it’s easy to get off track.
  3. If you use a home office, claim the deduction, but do it correctly. If you use a space in your home for your office, it must be a dedicated space and not the corner of your kitchen table. Talk with your accountant to determine the best way for you to maximize this deduction. Good recordkeeping of your home expenses will be vital to making that happen. Since our virtual accounting office allows all our team members to work from home, this deduction is one of the benefits.
  4. If you drive for business, keep track of the miles driven. Keep a log book in your vehicle and note the beginning and ending mileage as well as what the trip was for. This does not include your travel from home to your office. As with all expenses, keep careful records of all your car-related expenses throughout the year.

If you’re ready to improve your recordkeeping so that next year tax time isn’t so stressful,  contact Tina@TheAccountantsOffice.Biz for a complimentary 30-minute strategy session.

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