Small business owners have various options available to them when it comes time to file their taxes.
There are a surprising number of tax cuts for small businesses.
When properly utilized, tax laws can help reduce the amount of money owners owe to the IRS at the end of the year.
Self-employment
Those who are self-employed may feel the strain of handling things like carrying their own health insurance.
However, it turns out that 100% of medical insurance premiums can be counted as a deduction. By taking these deductions on “Line 29 on the front of the 1040 form,” this will reduce your “adjusted gross income.”
Another avenue that owners should be aware of is their ability to deduct everyday items and supplies that they use for their business.
Although it’s considered standard for businesses to be able to use a yearly “standard” deduction for equipment that depreciates; it may not be the best method.
There is a term referred to as “expensing” that can allow owners to deduct the full amount of their equipment purchases all at once. This may in turn allow owners to fall into a lower tax bracket.
Charitable Contributions
Charitable donations are a great way to share your business success with others.
In addition to helping others it also gives businesses an additional outlet for potential media exposure.
However, for a gift or monetary donation to qualify on your taxes the IRS states that your donation must be made to a “qualified charitable organization.”
An example of qualified organizations would be churches, non-profits, and those with a 501(c)(3) status. The IRS has a search tool that can be used to “search for and select an exempt organization…”
Taxable Income
According to the IRS, “Generally, an amount included in your income is taxable unless it is specifically exempted by law.”
The IRS states the following areas for you to consider when it comes to filing your taxes, “employee compensation, fringe benefits, business and investment property income, partnership income, S corporation income, royalties, virtual currencies, and bartering.”
These areas fall under the IRS umbrella as possibilities for taxable income. Businesses should seek detailed information from the IRS under all the areas in which they may qualify.
Reviewing these rules and regulations could help reduce your chance of inaccurately reporting information on your tax forms.
To find out more about professional business services that could benefit your business and avoid tax implications please contact us today. LUXA Enterprises specializes in outsource accounting, hr and payroll.
