Small businesses can’t usually afford to give money away to the government. If you deserve a refund, then you need to make sure you get it. It isn’t always easy, though, for small business owners to tell whether they have maximized their deductions. The following tax tips will help your small business thrive by lowering your tax burden.
Tax Tip #1: Claim Your Auto Expenses
If your business owns a car (or if you use your car for business purposes), then you can deduct auto expenses from your taxes. There are two basic ways to do this: the actual expense method and the standard mileage rate method.
If your business owns a newer car, then you usually get more money by using the actual expense method. Hold on to receipts whenever you spend money on repairs, replacement parts, fuel, and services. You’ll need them for your taxes.
If you have an older car or you didn’t keep up with all of your receipts, then you can use the standard mileage rate method. In 2012, the standard rate is 55.5 cents per mile. Keep track of the miles you drive for work and you can deduct 55.5 cents for each of those miles.
Tax Tip #2: Get an Accountant
Small businesses might not need full-time accountants, but you should have an accountant for certain services, such as filing your taxes and keeping track of your payroll. Yes, it costs money to have a CPA do your taxes, but it’s usually a much better option than doing them yourself (you’re going to make a mistake or miss a deduction) or having a cut-rate company fill out forms for you (they’ll probably make some of the mistakes that you would make on your own).
Many CPAs also provide legal services that can come in handy, especially if you get audited by the IRS. They might also represent you during the audit. In other words, you don’t have to worry about the dreaded audit because you have a professional in your corner. Not all CPA offices do this, so ask around to make sure you choose someone who offers legal services, too.
Tax Tip #3: Get More Deductions for Small Businesses
If your business spends money on it, then you can probably deduct it from your taxes. That includes entertaining clients, professional development classes, books pertaining to your work, and even the accountant you hire to do your taxes. It’s important to keep receipts for absolutely everything. If you don’t have a receipt, then you don’t have proof that you spent money on it.