The first half of the year is quickly coming to an end. As a business owner, I like to take this time to reflect on my business. Am I on track to meet my goals? Am I seeing the growth I projected? Are my books up-to-date? A very important aspect to a business is to make sure you close your books every month. A big mistake business owners make is waiting until the end of the year to bring all their paperwork to their accountant. Some business owners choose to do their own accounting in order to save money, however, doing your own accounting can be very time consuming and, for someone who is running their own business, time is worth a lot more than money. You might be surprised how affordable a monthly accounting service can be and you could eliminate the stress you have month after month worrying that your paperwork is not up-to-date. Working with an accountant can also ensure you are not missing out on any tax advantages. There are many benefits to hiring an accounting professional, however, if you still want to do your own accounting, then read this short list of tax advantages that are often overlooked.
1. Cellphone Use
Your personal cellphone bill can be written off for up to 80 percent if you are using your personal phone for work and are not being reimbursed by your employer. However, if you are already receiving reimbursements from your employer, do not cancel them because your employer’s reimbursements could be worth more than the tax write-off.
2. Interest on Loans
Tax advantages on the interest paid on business loans and credit cards is often overlooked. You cannot write-off the loan itself, but you should keep track of it in your accounting software and talk to your accountant about this. (This needs to be handled carefully because some business owners either write-off the loan itself or enter the loan as income and both can affect your final taxes negatively.)
3. Auto Expenses
Auto expenses, such as mileage, parking and DMV registrations for vehicles that are not owned by the company, but are used for your company, can be written off. (Make sure you are keeping track of your mileage and ask a tax professional to help you calculate the percentage that you can write-off.
If you have a home office, make sure to write-off the utilities you use for business purposes and consult with a tax professional who can assist you on how much you can write-off.
5. Selling Expense
You can write-off a selling expense. If you are selling your trust, in other words, you are selling yourself, then you can write-off beauty costs/personal upkeep that promotes your presentation. This can include, professional attire, shoes and cosmetics. However, in an audit, you will have to prove your services need these types of expenses. Again, talk to an accountant or tax professional to make sure you can write this off and they will help you calculate the appropriate percentage.
6. Meals and Entertainment
Meals and entertainment can be written off up to 50 percent and under special circumstances, up to 75 percent. When your meals and entertainment are to discuss company issues or when you are having meetings with prospects, clients and/or employees you can write your meals off 100 percent. Remember to indicate on each receipt who you met with and for what reason. This process might be a bit time consuming but the write-off payout can be great.
There are many other write-offs that your particular company could be taking advantage of and for that reason it is extremely important that you consult with an accountant today.
*Leave your comments below and tell us any tax advantages you have used for your business, we would love to hear from you!*