Some business owners attempt to save money by preparing their own taxes. In the end, they actually may pay more in taxes than are necessary, or they may underpay, which could result in losing hundreds or thousands of dollars.
According to an article published by Tyler Martin, CPA, here’s a list of things business owners commonly forget on their taxes:
Deduct Advertising and Promotion Costs. This includes media, Internet and any other advertising that promotes your business. It would also include novelty items or promotional gifts, such as coffee cups, t-shirts and pens with your company name or logo on them.
Deduct Dues and Subscriptions. This includes magazines and periodicals that are necessary for your business, as well as membership fees paid to any business-related organization.
Deduct Licenses and Permits. If your city requires a business license, make sure to deduct the cost of it.
Deduct Business-related Internet Costs. If you use the Internet for your business or have a website, then there is a good chance some or all of your Internet bill is deductible.
Deduct Business-related Cellular and Telephone Expenses. Calls or lines for business purposes are all deductible.
Deduct Office Supplies. Office supplies used for your business are deductible.
Deduct Business-related Meals and Entertainment. Do you take clients out to lunch or dinner to discuss business? If so, 50 percent of these costs is deductible.
Deduct Business-related Travel. Whether it’s airfare and hotel costs to attend a trade show or the cost of gas to drive to training or an industry event, you can deduct these expenses.
Deduct Business-related Auto Expenses. There are couple of ways you can deduct auto expenses, such as tracking your mileage or deducting the cost of a vehicle dedicated solely to your business. It’s best to consult a tax expert to determine how much you should deduct.
Deduct Business-related Electronic Equipment. Computers, printers and smartphones used for business are partially or fully deductible.
Deduct Outside Services. Costs related to your business, such as tax and accounting help, are typically deductible.
Pay Self-employment Tax. If you are a newly self-employed person, you may not be aware that you will be responsible for a new tax: self-employment tax. It can add to your tax bill quickly, so make sure you understand how the tax is computed and plan your cash flow accordingly.
Pay Payroll Taxes: If you operate your business solo as owner and operator, then you may have yet to face the complications of payroll taxes. As your business grows and prospers, you may need to hire employees. Payroll taxes can be complicated due to compliance policies and deadlines. Inaccurately paid payroll taxes can, in fact, cause businesses to go “belly up,” according to Jessie Seaman, a licensed tax professional and senior staff associate at Tax Defense Network.
Some of the stress and pressures of calculating or miscalculating taxes that are due can be relieved by outsourcing to a tax professional. The fees incurred to hire a licensed tax professional are relatively cheap in comparison to the potential expenses paid by the business for improperly prepared tax returns.
In addition to considering hiring a professional, it is crucial to keep good records throughout the year, and you can pay taxes quarterly to stay on task. If you are not keeping up with expenses and receipts and/or avoiding deadlines, it will be very difficult to try to accurately run down all documentation and figures that are required in order to file your taxes.