If you own a small business, you may be planning ahead when it comes to your company’s taxes. While some small business owners ignore tax planning until they have a scheduled appointment with their certified public accountant, proper tax planning should really be an ongoing process. At Ivy Ridge Asset Management in Rhinebeck, we’re proud to be a leading provider of tax planning and financial services for businesses across New York. In this article, we’ll discuss some tips and tricks when it comes to small business tax planning so you can be well prepared for the year ahead.
Tax Planning Tip #1: Keep All Of Your Company Receipts
If you’re like most small business owners, you dread the annual tax discussion with your certified public accountant (CPA). If you don’t make a point to keep invoices and receipts from your company expenses, your quarterly estimates could be way off. When you meet with a CPA to discuss your business’ income and and monthly expenses, you can take full advantage of the various provisions, credits and deductions that are legally available to you.
At Ivy Ridge Asset Management, we understand how complex and complicated tax planning can be, which is why we offer personalized assistance for small businesses across New York. If you need help setting up a successful organization system to keep tabs on your company’s expenses, contact our financial planners today!
Tax Planning Tip #2: Maximize Business Entertainment Expenses
One great way to save on your business’ taxes is to deduct any entertainment expenses that occur throughout the year. Not only will these events be fun and rewarding to your employees, you can end up saving money in the long run! Starting in 1994, the IRS has allowed small businesses to deduct up to 50 percent of their entertainment expenses on their annual taxes. In order to qualify for this type of deduction, business topics must be discussed before, during or after any meal you decide to write off. The surroundings of the event must also be conducive to the business discussion, for example, a small and quiet restaurant is an ideal location to host a business dinner with new clients.
Tax Planning Tip #3: Business Automobile Deductions
If your small business utilizes vehicles throughout the day for operational purposes, you may be able to deduct automobile expenses on your taxes. As you may already know, automobiles can be quite an expense, especially when you have to drive long distances to meet new clients or business partners. The IRS has recently accepted a new mileage deduction rate at 36 cents per business mile, 14 cents per charitable mile and 12 cents for moving and medical mileage. Make sure to keep track of any mileage you travel in a log book so you can reference it when you meet with your certified public accountant.
If you’re unsure whether or not your business qualifies for automobile deductions, contact the certified financial planners at Ivy Ridge Asset Management today. We’ll work with you one-on-one to ensure you are deducting business expenses appropriately so there are no costly tax surprises down the road.
Tax Planning Tip #4: Don’t Forget About Business Insurance
Did you know that small businesses can deduct things such as business continuation insurance, malpractice coverage and the business owner’s policy from their taxes? While these items are fully deductible, there are a few things to keep in mind when it comes to your company’s health coverage. A business may qualify to claim a tax credit for up to 50 percent of the premiums, which in most cases is a better tax break than an actual deduction.
Tax Planning Tip #5: Home Office Tax Deductions
If you maintain a dedicated office area at home for your small business, you have the ability to deduct home office expenses from your taxes. This deduction can include both direct costs, such as painting a home office, as well as indirect costs, such as the percentage of your rent or mortgage interests that reflect the percentage of business use in your home.
Tax Planning Tip #6: Employee Benefit Programs & Retirement Plans
If your small business offers employee benefit programs or retirement plans to your employees, you may be able to deduct some of those expenses from your taxes. If you are self-employed and saving for your own retirement plan with a SEP, IRA or Keogh, don’t forget to deduct your contributions on your personal income tax return!
Tax Planning Tip #7: Office Supplies & Furniture
When you purchase office supplies such as pens, paper or furniture for your small business, you have another tax-cutting opportunity for your company. When it comes to office furniture, such as desks, chairs and computers, you have a few ways to go about your deduction. You can deduct 100 percent of the cost of office supplies during the year of the purchase, or you can deduct a portion of the expense over seven years, also known as depreciation. If you’re interested in deducting the entire cost of your office supplies in one tax year, you’ll need to utilize Section 179 in your tax paperwork. Thanks to the Protecting Americans from Tax Hikes Act that was enforced in December of 2015, small businesses are allowed to deduct up to $500,000 in office expenses with a low inflation rate.
If you need help deciding how to go about deducting office supplies and furniture from your small business taxes, contact the certified public accountants at Ivy Ridge Asset Management today. We’ve successfully helped thousands of business across New York with our innovative tax planning services and we would love to do the same for your company.
Tax Planning Tip #8: Deduct Contract Labor
Many small businesses hire independent contractors to meet their unique labor needs. The cost of contract labor can be deducted from your taxes as long as you complete the proper paperwork with your accountant. Make sure that you give the contractors who earn more than $600 a Form 1099-MISC during the time of hire so you can accurately monitor and save all of your contract labor expenses.
Ivy Ridge Asset Management is proud to be a leading provider of tax planning services throughout New York. Since 2004, we have helped hundreds of businesses optimize their finances through a variety of proven and efficient financial techniques. From portfolio management to retirement planning and social security optimization, our financial advisors have the skills and expertise to help you reach financial freedom. If you’re looking for new ways to lower your taxes and increase your small business’ profitability, contact our licensed financial planners today!