Small Business Tax Tips

Small business tax tips help companies understand the importance of keeping receipts, maintaining good records, and knowing about deductions that are legitimate. Keeping good records make it easier when filing income tax to recognize legitimate deductions. A small business tax credit will reduce amount owed to the government. Some of the allowable credits include disabled access, investment, work opportunity, research, alcohol fuels, and employer social security. Other deductions may include travel expenses, entertainment expenses, depreciation, supplies, and equipment. A company owner should apply Biblical principles when making decisions about operations in order to be successful. "So that thou incline thine ear unto wisdom, and apply thine heart to understanding" (Proverbs 2:2).

A company will gain returns by keeping good records, receipts, utility bill statements, credit card statements, bank statements, any cancelled checks, invoices, and any other paperwork that might be needed to prove a valid expense. Deductions include office supply expenses, computer expenses, entertainment, interest paid, and equipment. Small business tax tips emphasize that anything used for the operation of the company may be tax deductible. In some situations the entire amount may not be deducted but only a portion or percentage. One example of this may be utility expense for a home office. The amount that can be used would be based upon the percentage of the space that the company uses in the home.

Building a ramp for disabled individuals to enter an establishment could mean a deduction on the expense. This could also include installing a railing in the public restroom and making a special parking space as well as any expense incurred for signs. The small business tax credit could be as much as half of the total cost up to a maximum amount. Easy access for those who are disabled is a consideration that is appreciated by the customer and is recognized by the government as a legitimate deduction.

An investment deduction includes such investments as installing solar paneling or any type of installation that saves energy. This includes any expenses incurred for remodeling a building to be more energy efficient. This type of expenditure goes a long way in not only helping to downsize costs for utility services but is also considered a smart growth or green expense. A small business tax credit makes this a worthwhile endeavor and the long-term benefits to the environment make it well worth the time and cost to make it a reality.

Travel and lodging expenses are deductible as long as they are business related. Small business tax tips include allowable deductions such as meals and airfare as long as the expense incurred is entirely for company purposes. When combining business with pleasure there are limitations on what can be claimed as a deduction. Entertainment expenditures can be claimed up to a reasonable amount while traveling.

Hiring qualified workers such as veterans, the disabled, and ex-felons can qualify a company for a work opportunity deduction. The small business tax credit applies for anyone who is receiving public assistance or has special employment needs. This type of deduction encourages employers to hire those who might be considered an undesirable employee by many. Veterans often have difficulty once they are out of the service in procuring employment. Some employers will not consider an ex-felon out of fear of loss or damage to property or other employees. In addition, hiring a disabled individual may mean making adjustments in equipment or property. Companies who take out the time to make these adjustments or changes are rewarded for doing so.

Any expenses that are incurred toward research and experimental activities can be taken as a deduction in the year that they are incurred. This encourages companies to spend more on development of worthy causes that could help the economy or the environment. Research and development could lead to drugs that could save lives or inventions that can enhance the lives of others. A small business tax credit can make these types of inventions worthwhile. Drugs can prolong life, raise the quality of life, and even save lives.

Business expenses for the use of ethanol or methanol are deductible expenses. This includes the use of or selling of these types of fuel. Alcohol produced from natural gas or coal does not qualify for the deduction. These types of allowances are there because they help the environment by cutting down on air pollution. Allowances such as these encourage company owners to consider switching to cleaner fuels. Another example of deductions for cleaner fuel includes purchasing a hybrid vehicle that runs on cleaner fuels and electricity instead of gasoline.

Other items purchased for company use may include an automobile, computers, cell phones, entertainment equipment, printer, office equipment, and so on. High dollar items can be capitalized and depreciated over several years. These are company assets and the expense on the depreciation can be claimed against taxes owed. Small business tax tips include learning about deductions and the importance of keeping up to date records on monthly depreciation and yearly depreciation. There are limits on total depreciation expense per year per vehicle.

Employers who allow their employees to accept tips that cause them to make more than minimum wage are allowed to deduct the amount from social security tax due. This usually only includes companies that sell food and beverages. Other types of companies that allow their employees to accept tips should contact the IRS to find out if they are allowable. Some of these companies may include car wash services, cosmetologists, valet parking, and so on.

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