Are you aware of the tax advantages you have when you own your own small business? The IRS qualifies any ordinary or necessary business expense as a deduction. You can also deduct the cost of personal property when it is for business purposes.
You may also deduct for the following expenses:
• Transportation expenses
• Payroll expenses
• Operating expenses
• Business related insurance premiums paid out
When it comes to deductions for your Home business, compliance to the IRS regulations are important to know. They state:
“To take the deduction, you must adhere strictly to the business exclusivity test, which does not allow, for example, a self-employed person to deduct a den used for both managing business finances and as a family playroom. You must also use the place regularly; sitting at a desk once or twice a year does not count, but once a week probably does.
If you believe you qualify for this deduction, you must figure out how much of your dwelling you use for your home office. The IRS accepts any logical method for calculating this, such as dividing the area of the room by the area of the house. That percentage then applies to related expenses.
There is also a self-employed tax deduction that says even though you pay your own Social Security and Medicare taxes as a business owner, you get to deduct half of what you pay in self-employment tax from your adjusted gross income on your 1040 form, according to the IRS.
Intuit software has a program specifically designed for the Self Employed that can calculate all your taxes and provide the small business owner with the tools necessary to keep your taxes in line with the rules.
A regular 1040 form using Schedule C is used for small business owners. This form calls for itemizing all expenses. If you pay someone to do your taxes, you can also deduct that expense whether online or in an accountants office.
In owning your own business, you don’t have to be afraid of what the taxes will hold for you. There are many deductions to be considered and you will find, doing taxes for a business does not have to be a “headache”, in fact… who knows, it may save you “heartache” compared to working for a corporation or business!