January and February are the months when people first start stressing about small business tax preparation. Though the thought of where to start doing your taxes can be stressful, there are plenty of things you can do to make tax season a breeze for your small business. Here are 5 tips that will help you save money and reduce stress.
- Don’t Forget Startup Costs
If you’re a new business owner, then you may be missing out on the chance to save money by deducting startup costs. Think back to the early days of your business. It is likely that you incurred a good deal of business-related expenses even before your business had officially launched. Did you take a continuing education class this year? Did you have lunch with a future client? Writing off these early expenses can help you to save money!
- Car Expenses Count
Though you don’t work from your car (at least we hope not!), your car is often an important aspect of your business and must be accounted for in your yearly taxes. Travel expenses are a valid small business tax deduction. Calculate business-related car costs using the IRS standard mileage rate, which was 56.5 cents per mile in 2013. Throughout the year, keep track of miles driven, as well as car maintenance costs (car washes, tire changes). Many of these expenses are likely deductible.
- Your Staff Matters
Under the Work Opportunity Tax Credit, your business can receive tax deductions for hiring certain types of employees. These types of employees include veterans and people with disabilities. Take stock of your staff and be sure to include deductions for any employees that meet these qualifications.
- Give Back
Everyone knows that contributions to charity are an important source of tax deductions, but few people know that it’s not just money that’s tax deductible. Did you donate property, inventory, or billable time this year? You may be able to deduct the value of these goods and services from your yearly taxes. The same goes for costs associated with hosting a benefit or fundraising event. Be sure to track your giving throughout the year.
- Go Green
There are lots of ways that a business can go green, and some of these upgrades are tax deductible. Did you update your heating system this year, or make changes to your building that increased its energy efficiency? Does your fleet include hybrid cars? All of these eco-friendly expenditures may be tax deductible. Be sure to check with the U.S. Small Business Administration to see how much you might be able to save.
These are only a few of the deductions your small business might be eligible for. If you have employees that work from home, be sure to check out Quill’s guide to the home office. Thinking ahead to taking part in marketing efforts such as Small Business Saturday can help you budget accordingly and have enough to drive your business forward.
Small business tax preparation doesn’t need to be stressful. Keep track of your spending throughout the year to maximize the amount of small business tax deductions your business can receive come tax day. In addition, make sure you have all the necessary tax forms and supplies to help you organize this maelstrom of materials. As with any tax deductions, you’ll want to back everything up with paperwork. For instance, a record book will be a great help in the event that you get audited. A good paper trail and thoughtful spending and record keeping will save your small business money and increase profits.