Time For Taxes
Filing income tax occurs once per year but tax planning is a year-round exercise. Here’s some simple tips:
- Keep your business and personal expenses separate by maintaining separate bank accounts and credit cards.
- Prepare and review an income statement and balance sheet every month.
- Prepare your deductions with good and thorough documentation. Look for the following:
- Entertainment —Keep track by documenting the purpose, amount, date, and place, as well as the names and business relationships of the people entertained. Generally, only 50% of food, beverage, and entertainment expenses are deductible.
- Meals —Only those meals away from home are deductible.
- Travel —To support mileage expenses on a car you need to keep a trip log separating personal and business use. A simple note in your calendar or smart phone is a handy way to account for it.
- Home Office —The room cited must be used exclusively for conducting business.
- Health Insurance — Premiums paid for employees are deductible.
- As you progress through your tax prep work note the areas in which you lacked sufficient documentation. Rather than waiting until the end of this year to prepare for the next tax season, implement the necessary changes as soon as possible.
Are you ready to file your business’s taxes?