When you own a business, you know how much work goes into setting up the shop, organizing your products, gaining clientele, and maintaining your operations. Small business owners are responsible for everything, including business accounting, tax preparation, and other business needs.
Sometimes the best solution is to outsource business accounting services to maximize your time and resources, even if you have the funding to pay for a full-time accountant. Let’s examine the tax credits available for business owners and how to deduct business expenses when filing.
Then, we will explore common mistakes business owners make while filing, and how you can work with an accountant to make this tax season the easiest it has ever been for you!
What Business Tax Credits are Available?
Business accounting services can help maximize and discover all tax credits based on your unique business and filing needs.
However, here are some general tax credits available to business owners:
- General Business Credit
- Investment Credits
- Work Opportunity Credits
- Credits for Social Security and Medicare Expenses
- Energy Efficiency Credits
- FMLA Credits
- Small Employer Health Insurance Premiums Credit
- Small Business Pension Plan Startup Costs Credit
Small business tax credits are more specific to the size and profit of a business, but all business tax credits can be a powerful financial incentive during tax season. All these credits have different criteria for claiming them, and different forms used to claim them while filing.
If you are already feeling overwhelmed or excited about this list, talk to one of our tax experts to get every tax break you have earned without stress and hassle. Let’s discover how to deduct business expenses and reduce your taxable income. We will also explore the difference between tax credits and expense deductions later.
How to Deduct Business Expenses
It is important to be informed about what can be claimed as a business expense in order to deduct it from your taxable income. To deduct business expenses, you can either file for tax credits listed above or tally expenses you paid throughout the year to claim during filing season (or both!). What counts as eligible business expenses for tax deductions?
What Expenses are Eligible to be Claimed as Business Expenses?
The reality is that so many items can be claimed as business expenses for tax deductions:
- business meals, travel, and parking
- a vehicle used for business purposes
- insurance expenses
- home office expenses
- phone and internet expenses
- education and training
- charity contributions
- energy efficiency improvements
- medical expenses
- startup expenses
- retirement contributions
- employee and client gifts
The above list is not everything that counts as a business expense, but it provides a good idea of what you can write off during tax season if you are a business owner. Tax preparation can be made easier when you know what items are eligible. Also, if you track these expenses as they are spent throughout the year, then you will be in an even better position when the time comes to file. Staying organized will always be key to success in tax preparation and filing.
Common Mistakes You Should Avoid When Filing Taxes
We can help you with tax preparation but can also tell you about common mistakes to avoid when you file your taxes. Mistakes with the IRS can be expensive and even illegal. So, don’t get caught up in that mess when you can solve your tax filing problems by consulting with us.
- First, business owners often confuse tax credits and business expense deductions but the terms are not interchangeable. Tax credits reduce your tax amount owed, and expense deductions reduce your taxable income. Knowing this difference will help you better expect what to owe or get back in taxes.
- Unorganized or rushed filing is the result of poor planning and bookkeeping. Avoid this mistake by tracking your expenses and income throughout the year and storing it in a secure location. When it comes to filing, you will be ready to do so with ease and organization.
- Not working with a CPA. Avoid this mistake by working with an accountant who can help you file quickly and correctly without any frustration. Think of it this way: you won’t regret working with an expert, but you may regret not investing in one initially.
Work With Your Accountant to Create a Successful Business Tax Plan
Ready to get started on filing your taxes? You have until April 18, 2023, to do so unless you file for an extension. However, don’t wait until the last minute!
Our team of tax professionals and experts here at Waters Hardy are ready to help your business get its tax filing done in an efficient and accurate manner.
Contact us now to get started on creating a successful business tax plan.