As a small business owner, there are many tax tips you can follow in the new year
. With the April tax filing deadline closing in, now is the time to get organized and to answer any questions that may be on your mind.
As a small business owner, there are many tax tips you can follow in the new year. With the April tax filing deadline closing in, now is the time to get organized and to answer any questions that may be on your mind.
Do you run your business out of your home? Was 2014 the first year you did so on a regular basis? If you answered yes to these questions, you may have some concerns regarding home business deductions. Here are three of the top questions to answer:
1. What is the home office deduction? As the name suggests, this is a deduction for having your office in the home. Rather than remain confused on this subject, visit this page of the IRS website. It has all the information you need.
2. Is the use of my car considered a business expense? Just because you work from home doesn’t mean you will stay inside the entire year.
Every time you leave your office you have to ask yourself the following question: is the trip related to my business? If the answer is yes, such as for a client meeting, you can deduct the standard mileage rate for business. For 2014, this was 56 cents per mile.
The IRS shares more information on this here.
Tip: keep clear records related to your business travel. You can write this in a notebook or use an electronic tracking device. Either way, you must be able to “back up your mileage claims” in the event of an audit.
3. Should I keep receipts for deductible expenses? Nobody wants to hold onto piles of receipts and billing statements, however, this is important in the event of an audit. You want to be able to prove the expense, no matter what it may be, if the IRS comes calling.
There are many benefits of running a home business. At the same time, this will bring forth many tax related questions, such as those detailed above. Are you familiar with what you should and should not be doing from a tax perspective? Don’t leave any questions unanswered as your home business grows.