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4 Overlooked Tax Tips For Small Business

[ 0 ] Feb. 14, 2014 | SBO Editor

Tax tip

This tax season, there are several ways to make sure your small business doesn’t pay Uncle Sam more than it absolutely must. Here are some of the top overlooked tax tips, business deductions and credits small business owners should keep in mind for 2013, according to Jessie S. Seaman, who leads the business tax team at the Tax Defense Network (www.taxdefensenetwork.com).

Tax Tip 1.     Home-based businesses: Working from home allows for the home office deduction, but it also allows for travel expenses if the home is the “place of business.” When you leave home (principal place of business) and travel to different locations for business purposes, all the travel is deductible. Be sure to keep a log and records so the standard mileage rate or actual expenses may be taken. Don’t overlook any part of this tax tip.

Tax Tip 2.     Sales tax: State sales tax, especially on big-ticket purchases like vehicles and equipment, is fully deductible. This is an often overlooked tax tip.

Tax Tip 3.     Interest and bank fees: Businesses can write off interest paid on credit cards, loans, overdue bills or account payables, and even bank fees such as nonsufficient funds fees or monthly surcharges. Make sure you take advantage of this tax tip.

Tax Tip 4.     Hiring veterans: The “Work Opportunity Credit” is not a deduction because it does not reduce “income”; it actually reduces the final tax bill, dollar for dollar. The credit is available to businesses that hire veterans for the first time. (There are additional guidelines that must be looked at to determine how much the credit is for, such as how long did the vet receive unemployment compensation? Is the vet disabled? etc.) Employers must file Form 8850 with their state agency (typically within 28 days of hiring the veteran) to get certification. Contact the IRS at www.irs.gov/ if you need clarification on this tax tip.

Remember, tax rates for people with higher incomes ($440,000 for a single person or $450,000 for married filing jointly) increase to 39.6 percent, Seaman says, so be sure to take all the deductions the business needs to stay below this income limit. The income limit is for individual taxpayers, but most small business owners pay the income tax on all net profit.

Jessie is a certified enrolled agent and teaches business law at the University of Phoenix’s business master’s program. Jessie received her law degree from Florida Coastal School of Law and is a member of the Florida Bar Tax Section.

The Tax Defense Network’s team of licensed tax professionals, enrolled agents, attorneys and CPAs has resolved more than $120 million in tax debt. The Tax Defense Network is A+ rated by the Better Business Bureau. Learn more about the Tax Defense Network at www.facebook.com/taxdefensenetwork or www.twitter.com/taxdefense.

 

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Category: Features