Tax season is in full swing – in fact, you only have about 20 days to get those returns in if you haven’t filed for an extension yet. No doubt, dealing with business taxes is frustrating as its pretty time consuming and adds another item on your jam-packed to-do list. But, don’t throw in the towel just yet – you still have the opportunity to take advantage of some important tax write-offs for your business.
Thanks to our friends at Freshbooks, we learned some last minute tips & tricks for those businesses that still need to file. Freshbooks also shared the below infographic which highlights eight often forgotten tax write-offs.
Last minute tips:
- “I can do it myself” – Many small business owners don’t have the tax education or knowledge they need to file their taxes correctly, but they don’t want to pay a large fee for a CPA to file for them. Understandable, you want to cut as many overhead costs as possible. However, know your limits – you don’t want to fear getting audited, and it will cost more to fix your return if you don’t plan & file correctly from the start.
- “I keep my receipts, so I don’t need a tax diary” – Make your life easier (and your accountant’s life, too) by using a software or online platform that tracks the invoices you’ve sent, time your staff has spent working, and expenses you’ve had throughout the year. Some expenses may be an important tax-break, so it’s important to document everything.
- “Yay, I got a HUGE refund” – Being thrilled about a big refund check from the IRS is a mistake. Sure, you’re excited to put it back into the business (buy new equipment, make office upgrades, etc.), but a large tax refund means you’ve given the government interest-free money for a long time. If you’re withholding money on your taxes you should adjust it to the point where your business gets a small refund – an accountant or tax preparer can help you with this.
“I payed myself $50,000 last year, I’m going to pay myself $200,000 this year” – Not a great idea. After a good year, you have to show a reason on your taxes should you decide to drastically increase your salary. Otherwise, according to Sandy Botkin, a former trainer of IRS attorneys, a portion of that money can be disallowed by the IRS as unreasonable compensation.
Finally, don’t wing it when it comes to your list of deductions and other tax-saving ideas. Plan ahead – and here’s the infographic from FreshBooks that highlights some taxable items you probably didn’t think of that can be written off. Good luck!
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