Tax Tips for Small Business Owners That Every Tax Pro Knows About
Paying taxes is a necessary business function. Every business in the United States, no matter how large or small they are, is required to file tax returns for every year they earn income with the Internal Revenue Service. Failing to do so can result in fees, business closure, and even jail time for business owners. Even if business owners are, in fact, optimistic and on-the-ball about filing taxes, laypeople often don’t know how to file correctly. If you’re a small business owner, you should learn about these same tax tips that every accounting service provider Billings MT regularly uses.
Opening Costs Can Only Be Deducted If a Sale Is Made
Businesses, even small home-based businesses, incur start-up costs that owners often think they can report as deductions on their personal tax returns. As every accounting service provider Billings MT knows, you can only do this if your business actually records a sale in the year you’re hoping to deduct start-up costs. Deducting these expenses without recording such a sale can land you in trouble with the IRS.
Having a Home Officer Can Really Come in Handy
On business tax returns, money paid to rent or buy buildings they operate in can be deducted. You already pay rent or mortgage payments on your personal residence, whether or not you do business from there or not. Try to do more business from your home office so you can deduct your rent or mortgage payments from your business’ taxable income.
Don’t Mix Personal and Business Accounts
When it comes to paying taxes, you’re certain to face tons of confusion if you use your personal bank account to pay for business expenses. This practice – it’s a poor decision, by all means – is known as commingling.
Open another bank account for your business and handle its finances through there. Most banks offer free checking accounts, anyway, so you won’t be losing anything by doing such. Follow our Facebook page.