I shared several tips that can help you make the most out of this period â€“ tax time. Here are some more that you can use, if not this year then the next.
Donâ€™t forget that your equipment depreciates.
You can get lower tax because of depreciation. While you might hate the fact that anything you buy (equipment-wise) depreciates in value, you can use this for your benefit. Come tax time, make sure that you take inventory of what you have in the business and calculate each pieceâ€™s depreciated value. In addition to this, do not overlook the fact that each piece of equipment or fixture depreciates in varying degrees and rates. As such, tag the depreciation value of each thing separately instead of lumping them together as one.
Employ family if you can.
While this might raise some eyebrows, here me out first. If you have family members who are fully qualified to take part of the business, then it should not be an issue, right? This also has tax benefits as you would be paying him money (which is essentially his as he is part of the family) and at the same time, shift your money to a lower tax bracket (from company to individual). More so, you can claim him as a dependent earning a wage, which can give you higher tax deductions.
Just one more day and everything should be over and done with. If you had more issues than necessary this year, do bear in mind some of the tips that we covered in this post and the last. Perhaps next year, it will be better.
Yes, I know. This time of the year can be a difficult one, both for personal and business reasons. After all, I do not know anyone who honestly looks forward to tax time, but since there is no way we can get around it, why not make the most out of the situation and get it over with as painlessly as possible? Here are some quick tax tips that can help you do just that.
Keep your records straight.
The people over at the IRS are no fools, and neither will they suffer fools gladly. They know that small business owners will look at every opportunity to get tax breaks, and believe me, they know every trick in the book. As such, do not go overboard with those deductions. If I were you, I would keep my records as straight as possible, keeping every single receipt for business-related expenses. As long as you are not doing anything shady and you have a solid paper trail, then you should be good.
Avoid home state tax if possible.
This works in most states, where the law says that if you earn your income outside of the state, then you do not have to pay taxes on that income. Of course, this is entirely dependent on the laws in your home state so make sure you know exactly what is stipulated.
Going green pays.
This works two-fold. One, you contribute to the conservation of the environment. Two, you might get incentives from the federal and state government. Again, you have to check what kinds of green initiatives are included in the incentive program.
(to be continued)