When it comes to taxes, it doesn't matter if you are working on business taxes or personal taxes, its important to know what is going on. If you aren't paying attention, you may miss some deductions and get less of a refund that what you truly deserve.
That said, for someone running a small business, there are a lot of tax breaks that you can use to reduce your tax payable and potentially get a refund. If you don't know your options, you cannot take advantage of them.
Many businesses require a vehicle in order to operate. For this reason, you are able to use this vehicle on your business taxes. If it is a vehicle that is run for both personal and business use, you will need to keep track of the mileage for the business. Without this record, the IRS may not allow you to deduct your expenses. You are then able to use up to that percentage of vehicle expenses on your business taxes.
Any wages that are paid out to employees are allowed on taxes. That said, any payments taken out by sole proprietors, partners or those named on an LLC are not considered a wage. If you hire independent contractors for your business, you can deduct this from your business taxes as well. You will need to issue a Form 1099-MISC to anyone who is paid more than $600.
There are a variety of business expenses that you can deduct on your business taxes. One of these is the rent on any space you have. This can be an office, factory, storefront or warehouse space. If you own your space as opposed to renting, you can use that on your business taxes.
Every business experiences a variety of expenses in the day to day operation. Any supplies that are used for your business can be deducted as well as items such as the Internet and cell phone. Where this gets muddy is if you are running a home-based business and filing on your personal taxes. In this case, it's a good idea to look up the specific rules as to what can and cannot be claimed. Anything that is 100% business related can be claimed but if it's shared, then it can be tricky.
Expenses such as advertising can be deducted as well as commissions that you pay out. The hiring of an accountant or a lawyer is also deductible. Travel can be deducted as long as you meet certain criteria which are laid out by the IRS. It is a good idea to review this each tax year.
Regardless of personal taxes or business taxes, it's a good idea to review the changes each year. If you are uncomfortable with any element of your taxes, it is best to talk to a professional to get help. If you have started a business, you may want to hire a professional accountant the first year you file business taxes so you don't miss something. And hey, you can deduct that next year.
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