Hang
ups, let downs
Bad
breaks, set backsNatural fact is
I can’t pay my taxes
Oh, make me wanna holler
And throw up both my hands
I
love to find any reason or excuse to write down one of Marvin Gaye’s lyrics. My
client who is a sole proprietor sang this verse to me as I explained his tax
liability. I love all of my clients so I didn’t know whether or not I should
laugh or cry. I chose to play it safe and did both! A sole proprietor’s obligation may include taxes such as sales,
estimated, payroll, self-employment, federal, state, local, etc. It has been suggested that we should create a new postage
stamp bearing the picture of a weeping taxpayer. Sole proprietors
must be aware of all business tax deductions. As a sole proprietor,
you are allowed a laundry list of tax deductions. These are expenses that are
necessary and relevant to your business. Every tax season, a lot of sole proprietors neglect to maximize their chances of
reducing their tax liability. The reason is that they overlooked business
deductions that they could have taken. Below is a list of business tax
deductions for you to consider.
The Home Office
Deduction
This
deduction can help take the biggest bite out of your tax bill. If you are a
sole proprietor and work from home in a space that is regularly and exclusively
used for your business, you can take this deduction, even if that space is not
a completely separate room. However, it must be a clearly defined workspace
where no personal activities take place. Just because you did some work on your
living room’s couch doesn’t make it a qualified workspace for home office
deduction purposes.
General Business
Expenses
Even
if you don't take the home office deduction, there are many other expenses you
can deduct to shrink your tax bill. Keep all your receipts throughout the year
and a running log or weekly diary of expenses to prove that your deductions are
legitimate. Business expenses can cover many items and services, including:
- office supplies......deductible
- printing……. deductible
- postage and shipping……. deductible
- business insurance….. deductible
- professional fees…… deductible (accountants love to get paid)
- Gifts to keep your spouse
happy……Not deductible! Oh yeah, start running and don’t look back because
the IRS is coming after you.
Generally,
you can deduct all of your travel expenses if your trip was entirely
business-related. These expenses include the travel costs of getting to and
from your business destination and any business-related expenses at your
business destination, including tips, cab fare, and other "life on the
road" expenses such as dry cleaning. Meals are the only exception. You can
deduct only 50 percent of your meals while traveling.
If
your business trip includes personal side trips or extended stays for a
personal vacation, you can only deduct travel expenses used for
business-related activities. For example, suppose you live in New York, and went
on a 7-day trip to California. You spent the first 4 days in business meetings,
and the other 3 days spending time with your family. Unless, Mickey Mouse is
your business client, don’t try to deduct the family trip to Disneyland. In
this example, you can only deduct the costs of the 4 days you spent on business
activities. I know the IRS is so darn cruel!
Importance of a
tax consultant
Now
these baby ballers toy rappers
Calling
out my name to bring the boy backwardsShooting air balls at the basket
What you call money I paid more in taxes
Yes,
I know that I’m the first tax accountant to use a Jay-Z verse in a tax article.
I appreciate that even Jay-Z knows the importance of paying his taxes. As a sole proprietor, good records and qualified tax advice
are essential to the survival of your business. It's always recommended to
consult tax accountant like myself throughout the year. I provided you with a
simple outline of possible business tax deductions to reduce your annual tax
bill. However, tax laws are never simple and change on an annual basis. For
example, I didn’t discuss topics such as depreciation, expiring tax credits,
phase-outs, amortization, deducting car expenses, etc. Learning about tax
changes throughout the year can help your business grow. If you can reduce your
annual tax liabilities then you may have more money to invest in your business.
My
final piece of advice is to file only honest tax returns. What is the
difference between an IRS auditor and a Rottweiler? A Rottweiler eventually
lets go! Filing fraudulent tax returns are never worth the risk.
You
don’t have to say it….You’re Welcome.
2 comments:
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regards
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Thanks for the kind words!
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