Here are some of the top tax deductions for your small business.
If you can make sure that you are geting all of the Business Tax Deductions that you are allowed that would be a good thing right? So with some simple research you can get more money into your pocket at the end of the year.
It all depends on paying close attention to the IRS laws on just what is and is not deductible.
If you use your vehicle for business, or your business owns its own vehicle, you can deduct some of the costs of driving it.
The two methods of claiming expenses are Actual expense method and Standard mileage rate method.With actual you keep track of and deduct all your actual business-related expenses.
With standard you deduct the standard mileage rate for each mile driven, plus all business-related tolls and parking fees.
If you use a newer car mainly for business, the actual expense option provides a larger deduction. If you use the actual expense method, you can deduct depreciation on the vehicle.
If your auto is used for both business and personal use, only the business portion gets you a tax deduction. So you must keep good records of how often you use the car or truck for business and tabulate it all up at the end of the year.
You can deduct education expenses if they relate to your current business or occupation. The expense must be to maintain or improve skills required in your current job, or be required by your employer.
Who doesn’t like to save more money by reducing their taxes? In this article I can provide you six simple tips that can help you discover some additional tax deductions therefore you’ll be able to save more money. The cash saved should be reinvested in some income generating vehicle such as your own home-based business.
1. Keep track of all of your expenses. Whenever there’s a transaction, perpetually get a receipt. File them by type of expense and keep them during a safe place so you can simply find them.
2. Check with your tax preparer early to find out concerning all the tax deductions accessible to you. $4,000 in tax deductions can put regarding $1,000 further refund in your pocket.
3. Take advantage of tax credits. If you have got children below the age of 17, up to $1000 of tax credit is applicable to every of them.
4. If you’ve got a home-business, keep track of the business use of your personal vehicles. You’ll get $100 tax deduction for each 200 business miles you drive in 2010 (slightly higher in 2009).
5. Hire your children. If you use a home based business, you are allowed to deduct all wages they earn from you, and they’ll earn up to $5700 tax-free, per child per year.
6. Work with a tax professional. Yes, they do cost you money; however they will in all probability be ready to save lots of you so much additional than you may pay them.
In conclusion, knowing and understanding the tax process is very important if you want to save lots of money. Tax is a difficult business and causes lots of headaches to individuals who don’t track their expenses. Either hire a tax preparer, or simply do a higher job of tracking of your receipts to prevent the yearly migraines.
About the Author
Ron Mueller, a businessman has provided more information about tax saving tips at his website www.HomeBusinessTaxSavings.com. Logon to the website www.HomeBusinessTaxSavings.com and get more information NOW.
Saving to open a small business?
I would like to open a franchise or small business in early 2010. I am saving a lot of money per month, but want some input on tax-smart ways to accumulate the capital that I will need. It seems that the majority of ways to lower my adjusted gross income all involve locking away money until retirement age, which does not help me accrue capital now. Municipal bonds are great for the short term, but don’t have any tax benefits except on the interest that I earn… half beneficial. I need something or combination of things that will lower both my AGI and allow me to save for the less than five year term efficiently. Ideas??
I am currently not maxed in 401(k) but close, and am in the process of purchasing a home for the tax deduction.
Thanks Sincerely
You don’t need money to open a small business. What you need is experience, knowledge, a good business system, a good business plan to include a great marketing plan and good financial forecasts esp. cashflow forecast in order for other investors or banks to offer you a business loan. Money always follows a good business system, a good business manager and a good business plan.
How to Predict Your Business’s Financial Future With a Smart Financial Projection
Your survival as a new business comes from how fast you get sales. Without this income you won’t be able to pay your expenses, let alone make a profit.
In fact you cannot realistically evaluate your business concept without examining its potential profitability in advance of starting. Would you invest $10,000 in a stock without knowing something about the company’s profitability? Many new business owners invest this amount or more without any clear idea of the possible financial return.
To determine what financial return you may achieve you will want to create a projection of the profit or loss of the business for its first year. And you will want to estimate the amount of cash that will come into the business and what amount will go out. This is known as a cash flow projection.
Let’s look at each of these projections.
Making a Sales Projection
One of the hardest tasks you face before you open for business is to estimate what your sales will be by month for the first year in business. This is particularly difficult because to gain the greatest use from this projection you should do it 3-6 months before you launch. There is no magic formula for making a sales projection, but we have some suggestions.
The first step in projecting sales is to do enough research into your business to determine if there is a seasonal pattern to the sales. Articles about your type of business, interviews with other business owners and financial statistics collected by trade associations are helpful in determining what level of sales is produced during different times of the year. Department stores, for example do more than 40% of the total years sales in November and December.
Use this information to determine what percentage of sales you are likely to do each month of your first year.
Second, go back to your business description and marketing strategy to describe which one or two of your products will produce the majority of your sales. Determine what the “unit of transaction” will be for them. For example, if you are a consultant the unit of transaction is fees/hour or fees/day. A retail store might have a unit of transaction of so many boxes of a product/transaction. Using the promotional strategy you created earlier, estimate how many units you might sell in month one of your business; month two and so on.
On a piece of blank paper, make twelve vertical columns by drawing lines down from the top of the page to the bottom. Label the columns “Month I”, “Month 2″, etc. Write in pencil the number of units you estimate selling each month above the name of the month.
The third step is converting you unit sale estimate into dollars. By now you should have developed your pricing–either a single fee per hour or a price list of various products or services and their prices. Multiply each month’s unit sales estimate by your fee per unit or use an average of your different prices. This produces your dollar sales projection per month. Write the dollar sales projection for each month at the top of its column (where you wrote the unit sales projection before).
You have now completed a reasonably accurate one-year projection of sales for your new business. You next need to look at your estimated expenses.
Estimating Your Expenses
If you have completed your research on start-up and monthly operating expenses, you should have a reasonably good idea of your expense categories. Expenses come in two varieties:
Fixed expenses. These are cost that you have whether you have any sales or not.
Variable expenses: Money you spend to get new customers and to make and deliver your product or service are your variable expenses.
For example, if you buy a van for your business, the monthly loan payment is a fixed expense, while the cost of gasoline is a variable expense. Common fixed expenses include rent, insurance premiums, furniture and equipment rental and wages to employees.
Common variable expenses include advertising, supplies, gas and oil, raw materials and sales commissions.
Some expenses must be paid each month; others are due just once per quarter or possibly twice per year. In a vertical column next to Month I of your sales projections, write in “Operating Expenses” and fill in each fixed and variable expense you feel you will pay your first year. Next to the title of the expense, estimate the monthly dollar amount and write it in horizontally across the vertical columns created when you made your monthly sales projections. You now have a 12-mondi sales projection, by month, and a 12-month expense projection, by month. AR that is left now is to determine if you will be making a profit or loss each month.
Calculating Profit
There are three kinds of profit you deal with in business:
Gross Profit. This is the dollars of sales left after paying for the materials or inventory used to produce the sale. In businesses selling their time, labor or knowledge their gross profit is usually equal to their sales, since there is no cost of product involved.
Operating Profit. This is what is left of gross profit after you pay your monthly operating expenses (including your personal compensation). Interest on loans and taxes are not deducted.
Net Profit. This is your sales income left after all expenses, interest costs and taxes to your state and Uncle Sam. This is the profit left to put back into growing your business and to possibly pay yourself a bonus!
Returning to your projection worksheet, determine your profit (which is usually the operating profit) by subtracting from each month’s sales the monthly operating expenses, including your personal income, and interest expenses. To cover the income tax deduction, add on 25% of the total expenses before taxes and then subtract all of the expenses from the sales projection to determine your profit or loss.
It is not uncommon to incur a loss for the first few months of your business. Sales often materialize more slowly than you estimated and your expenses often run higher than you estimated.
Your Cash Flow
Cash is the fuel that runs your business. Your marketing attracts prospects and sells them on buying your product or service. From these transactions come cash. But cash goes out in paying for the goods and services that your company must consume in order to be able to deliver to your customers.
The movement of cash in and out of your business is called cash flow. Your management challenge is to keep more cash coming in than going out. This result is known as having “positive cash flow.” To be able to control your cash you should understand a few concepts first.
Profit vs. Cash
Being profitable is not the same a having positive cash flow. How can this be? The critical difference occurs because many businesses must give credit to their customers in order to the close the sale. Although the product or service being sold is highly profitable, if there is a delay in collecting the money a serious cash bind can develop. This particularly can occur early in your new business because you will be able to get very little credit from your suppliers and so will usually have to pay for your supplies some time before you can convert them into sales.
You may say: “I don’t give credit.” If you accept checks in payment, you are granting credit. Out of state checks require up to 10 working days to clear when deposited. And it is very difficult to determine if the money will be there when the check is presented for payment.
A business with good cash flow may be barely profitable at the end of the year. And a highly profitable company (on paper) can go out of business because the cash does not flow when it is needed.
To look ahead to how much cash you will need and how much cash you will receive; you do what is known as a cash flow projection.
The Cash Flow Projection
The projection form used for cash flow looks very similar to that used for the profit and loss projection. There are twelve vertical columns, each headed by “Month…” And there are horizontal rows containing expense categories. Several rows are added, however, on the Cash Flow Projection: “Starting Cash”, “Cash Sales”, “Credit Sales Collected”, “Monthly Cash Flow” and “Accumulated Cash Flow.”
Starting Cash. Unlike the Profit and Loss Projection, where we are only interested in sales and expenses each month, the Cash Flow Projection also takes into consideration the amount of cash you initially invest in your business. This amount is filled in the “Starting Cash” block on the projection form.
Cash Sales. Because you are only able to access sales for which you have collected the cash, you should separate your sales each month between those for which you receive payment and those where the customers promise to pay in the future.
Credit Sales Collected. After your first month in business, you will hopefully receive payment for sales where you granted credit. When you receive the cash you record it in this row.
Monthly Cash Flow. To arrive at the final outcome of the cash that came into your business in a month’s time and the money that was paid out, you take the total of the “Starting Cash” for the month, cash sales, credit sales collected, any other cash in, such as interest and subtract the total of cash paid out during the same month. The result is the “Monthly Cash Flow.” If more total cash was paid out than came in, this number is put inside of parentheses–($500)– and indicates that you had “negative cash flow” that month.
Accumulated Cash Flow – After the first month, you add this months cash flow-positive or negative–to the previous months cash flow to see how you are progressing throughout the year.
It is not uncommon to show negative cash flow for several months after you start. But you cannot afford to go very long in this condition. Every month that more cash goes out than comes in, you must inject more money into the business. This may mean borrowing more money, thereby increasing your business debt.
Realistically estimating your cash needs in advance of launching your business helps to prevent the unfortunate situation of running out of money just as your marketing starts to succeed. In next months column, you will learn how to collect your money more effectively, how to control costs, how to negotiate with suppliers and how to stretch your dollars.
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About the Author
Jeff Williams
Jeff is the founder and CEO of Chicago-based Bizstarters.com, selected as “The Top Entrepreneurial Website For People Over 50″ by Kiplinger’s Personal Finance magazine.
Jeff started his first entrepreneurial training company at age 40 and has since launched two additional businesses, both after age 50.
He is the author of eight workbooks, guides and DVDs on business start-up including his latest workbook – “The Ultimate Boomer Business Start-Up Guide”.
Jeff also serves as Featured Expert for Boomer Entrepreneurs for SBTV.Com, the #1 Video Source For Smart Small Business Information.
He can be reached at jeff@bizstarters.com.
How do you determine the depreciation basis for a separate structure home office?
Pub 587 says you can deduct expenses for a separate free-standing structure if you use it exclusively and regularly for business. We’re looking at a 10×10 unit. Based on size, the structure does not require city permits and is not included in the overall property appraisal value. How would you calculate the depreciation expense and portion of utilities on the Worksheet to Figure the Deduction for Business Use of Your Home?
For example –
Home is 900 sq ft and Seperate structure office is 100 sq ft
Home original cost 300,000 (Land = 200K, Bldg = 100K)
Separate structure original cost = 10,000
Method A: Office space is 10% of total square footage. Total basis is 100K + 10K = 110K. Depreciation basis for structure is 10% or 11,000.
Method B: Original cost of separate structure used for depreciation basis 10,000
If using Method B, would you still use 10% square footage to determine indirect expenses like utilities? Can you include mortgage interest and property tax?
Since it is a separate structure, there is no reason to relate it to the size of the house. Land does not depreciate, so the lot price is irrelevant. You should depreciate the $10,000 cost over the useful life of the structure.
It appears that the mortgage does not apply to the new structure since the mortgage must already exist on the house and land. If you finance the structure cost, the interest would be deductible. Property tax would be deductible to the extent it increases as a result of adding the structure. However, the IRS would probably not question some portion of property tax applied to the structure.
You could estimate utilities on the basis of square feet being realistic. For example if you don’t have a bathroom in the structure, applying 10 percent of the water bill would be inappropriate. On the other hand, applying more than 10 percent of the electric bill might be reasonable if you have a lot of equipment, such as computers, refrig, electric heater in the structure. the important thing is to be realistic. And to the extent that your insurance covers both buildings, a portion should be applied to the office structure.
Tax tips and tax help to assist taxpayers by describing options for tax reduction and tax cuts through lawful tax deductions.
Tax deductions contribute to national prosperity by providing capital to business. Tax deductions reduce taxable income. A $100,000 tax deduction reduces federal income tax by $35,000 ($100,000 X 35%) assuming a 35% income rate. Options for increasing business tax deductions include revising depreciation schedules, reviewing fixed asset listings, casualty losses, bad debts, and charitable contributions.
Real estate depreciation offers substantial opportunity for increasing tax deductions. Most depreciation schedules are established by simply separating land and long-life improvements. This simple approach is lawful but sharply understates lawful depreciation. About 20-40% of improvements for most properties are short-life items. Short life items can be depreciated over 5, 7, or 15 years. There are about 130 short-life items that have been determined by legislation, tax court decisions and IRS rulings.
Real estate depreciation can typically be increased by 50-100% for the first 5-7 years of ownership by obtaining a cost segregation study. A cost segregation study precisely values up to 130 components of real estate that can be valued as short-life property.
By obtaining a cost segregation study, it is possible to obtain a windfall of tax deductions by “catching-up” previously under-reported depreciation. This one-time “catch-up” can occur in the first tax return filed after the cost segregation study is performed without filing any amended tax returns.
Reviewing fixed asset listings (of business personal property) can generate a meaningful amount of tax deductions. They often include items that should have been expensed, which have been sold or thrown away or which have an excessive depreciation life. Items that should have been expensed include operating expenses (sometimes included by error) and maintenance or repairs (which was necessary but did not increase the life of the assets or component.) Section 179 allows business to use up to $108,000 of 2006 capital expenditures as tax deductions. Confirm you are not capitalizing assets that could be claimed as a tax deduction.
Casualty losses also offer opportunity for tax deductions. For a casualty loss, you can deduct: 1) the market value immediately before the casualty less 2) the market value immediately after the casualty less the amount covered by insurance. The portion that is not intuitive is: the market value after the casualty is much less than the value before plus the cost to renovate. Other factors which can and should be considered for tax deductions are: lost rent/usage, stigma (in some cases), construction management, construction risks, and entrepreneurial effort.
Bad debts are a subjective matter. Judgment is required to accurately estimate the amount that should be claimed as a tax deduction. If bad debts have not been examined carefully for several years, they may offer a meaningful tax deduction opportunity. (This applies to companies who utilize accrual accounting. Companies who use cash accounting can’t claim a tax deduction for bad debt since they never recognized the revenue.)
Do well by doing good. You reduce taxes in several ways when making charitable contributions. For example, you purchased land 10 years ago for $200,000, and it is now worth $1,000,000. However, you now realize you will never use the land for the intended purpose. You can donate the land to a qualified charitable organization and take a tax deduction for $1,000,000. However, you do not have to pay capital gains taxes on the appreciation.
Tax deductions sometimes seem arcane and complicated. However, a knowledgeable team of advisors from several fields can reduce your federal income taxes. The complexity of the tax code makes it difficult for any one personal to be knowledgeable in all areas.
Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of cities where cost segregation generates meaningful tax deductions.
City:
New York, NY
Houston, TX
Hartford, CT
Las Vegas, NV
Memphis, TN
Philadelphia, PA
Orlando, FL
Phoenix, AZ
Atlanta, GA
Bridgeport, CT
Worcester, MA
Akron, OH
Harrisburg, PA
Salt Lake City, UT
St. Louis, MO
Portland, OR
Scranton, PA
Greenville, SC
Bakersfield, CA
Madison, WI
Chicago, IL
Fresno, CA
Riverside, CA
Albany, NY
Indianapolis, IN
Birmingham, AL
Ft. Lauderdale, FL
Baton Rouge, LA
Augusta, GA
Honolulu, HI
Cost segregation produces tax deductions for virtually all property types, including the following:
Property Type:
Medical facility
Shopping mall
Restaurant
Country club
Fast food restaurant
Power center
Hotel
Car wash facility
Convenience store
Health spa
Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.
Industry:
Golf courses and country clubs
Transportation equipment manufacturing
Electrical component manufacturing
Real estate lesser
Apparel manufacturing
Wood product manufacturing
Plastic and rubber products manufacturing
Furniture stores
Beverage and tobacco product manufacturing
Building supply dealers
O’Connor & Associates is a national provider of investment real estate consulting services including commercial real estate appraisals, business personal property valuations, business purchase price allocations, business valuations, cost segregation studies, due diligence, and insurance valuations. O’Connor & Associates is a national provider of income tax, tax deduction,property tax,real estate consulting, market research,condemnation appraisals,highest and best use,cost segregation,financial modeling,Galveston central appraisal district,Tips and Tricks for Appealing Your Property Taxes in Brazoria,Brazoria county appraisal, and Federal tax reduction. Appraisal services are provided for all commercial property types including nursing homes, discount stores, truck terminals, tennis clubs, supermarkets, country clubs, medical offices, mini-warehouses, restaurants, vacant lands, skating rinks, community shopping, centers, power centers, car wash facilities and service stations.
About the Author
Patrick C. O’Connor has been president of O’Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes. He continues to set the standard in direction and quality of our appraisal products, adding services ranging from business valuations and business appraisals to cost segregation analysis for income tax reduction.
Are there tax benefits of starting a LLC in NJ if I’m not earning a ton of freelance money?
Hi – I earn about $3,000 a year on various freelance projects, ranging from entertainment writing to interior design. This is a relatively small portion of my income, and I’ve been listing it as ordinary income, filing 1099s and taking no deductions. I’d like to start an LLC, both to give more legitimacy to my work for my clients and to be able to take the home office / business expense deductions that I’m currently not.
I plan on doing the same volume of work and never hiring employees. Is this a smart tax move for me? Between computer equipment, the home office deduction and other expenses, I’d probably write off at least $6,000 in expenses a year. I’d love for the freelance business to take off one day, but I can’t count on it and need to base my decision on current numbers. Thanks!
I don’t see any reason that you would need an LLC…your liability should be almost none existant.
Having an LLC would not allow any further deductions.
If the biggest reason you want to start one is being able to create a loss..the rules are still the same (usually a profit in 3 out of 5 years, in your case, or it is a hobby and the expenses are limited to income). Basically, all you would be doing is creating more paper work for yourself with very little if any benefit.
Hope this helps.
Tax Tips & Information : About Tax Deductions for a Hybrid Car Purchase
Home Business Tax Deductions – 3 Deductions That Could Save You $1000s
Let’s face it, very year millions of Americans are over paying on their taxes and they don’t even realize it; their losing money by simple not obtaining all the appropriate tax deductions which are provided to them by good old Uncle Sam. In this article we are going to cover how you can use your home business as a way of acquiring the tax deductions you deserve.
Before we begin, there is one fact you absolutely need to know; if you plan on running a home business and want to be both successful and confident if the IRS ever comes knocking at your door, you need to keep detailed records on everything. A general rule when keeping records is to follow the “who, what, when, where, and for how much rule.” Keep these kinds of records, along with receipts, and you’ll be less likely to have problems finding and presenting information if you’re ever audited. A great way of maintaining records is to either create a simple recording and filing system with files and folders or you can purchase computer software which will make your job easier.
3 Home Business Tax Deductions To Help You Save
1 – Home Business Expenses
Most of the expenses you incur while running your home business are tax deductable. Things like business stationery–pens, paper, printer ink, etc; phone lines, internet connection service charges, utility expenses, gasoline used for business, client meals, etc can be deductible. A big plus of keeping good records, is that you can easily look back at these expenses and claim the deductions.
2 – Business Equipment
If you have a home business that uses equipment, you can get a deduction for that. This means your business car (if exclusively used for business), any specialized uniforms, fax machines, computers, diagnostic equipment, etc can all be deducted.
3 – Home Office Business Deduction
This can be one of the bigger tax deductions, but if you plan on claiming this deduction, you can only use your home office exclusively for your business. If you’re using your office for anything other than for your home business, you cannot claim this deduction.
About the Author
If you liked these Home Business Tax Deductions and would like to save more this tax season, visit us at: http://www.tax-wise.blogspot.com
I am starting a small business – do I need for a business license to obtain tax deductions?
I started a small business and I was wondering if you need to get the license before the end of the year for tax deductions
READ ALL response you do not need license to claim income type E for federal and state income tax, but reading in their entirety. You may be difficult with the state sales tax department if your company is required to collect and pay sales tax – the most (And do) do you need to be contrary to law. So, make call and find out. If you receive a certificate of sales tax authority. In addition you may having to submit their county with a DBA (doing business as). Without this DBA is not likely to obtain financing from a bank business today. In addition, you should contact your city to ensure that the company may operate within the region. I say this because some zoning regulations prohibit certain types of businesses to be in a residential area. In general, a home business, where customers fail at home or in the absence of park excess trucks or car repair is done, for example, are very good. If have a business on the Web is an example of a company that can work at home. IMPORTANT !!!!! The reason they say you must submit these additional forms if necessary because the federal tax on personal income and the state "may or possibly" the report of its program E to the population of the sales tax. And you do not want to be caught without charge or do not report their cases to the population of the State sales tax. heavy fines! The IRS is not stupid, do not try to claim business expenses without revenue. And do no claim unpaid rent and pay sales tax because the state if necessary. You can deduct a loss in business for many years to a CPA.
Discover The 3 Tips To Implement In Small Business Tax Deductions
If you’re running a small business, probabilities of you wearing multiple hats, juggling all parts of labor in your business are more. Everything appears to be urgent and wants your intervention. But, the foremost necessary issue in your small business is tax deductions because this could confirm survival or failure of your business.
Primarily few months of every year, you and thousands like you’re therefore stressed that it’s exhausting to file your business tax. Therefore, here are 3 simple yet powerful tips you’ll implement in your business.
1. Keep Systematic
When keeping track of all your accounts, keep consistent in the means you enter records every month. If you have always included a particular expense during a bound class, continue to try to do that. Do not produce a replacement category for it or else it will complicate your record keeping — the aspect of running a home-based business that most folks dislike the most. If you have ever set to hire somebody to handle your record keeping, then it’s to be maintained systematically therefore that he or she can make sure of your accounts without any hassles.
2. Write Everything Down
If you want to get the small business tax deductions you deserve, you will have to keep a record of each expense you make. Each receipt should be filed systematically or recorded during a tax-deduction record keeping software program. Be certain to backup your necessary documents frequently.
3. Recognize what’s deductible.
You’ll be able to solely keep the “right” tax-deduction records if you know what expenses are deductible! Therefore learn what special tax deductions are available to home-based business owners, and what records the IRS requires. The IRS “rules” are not difficult to accommodate, once you know what they are.
“Inadequate or incomplete records” is the #1 reason for lost deductions in IRS audits of home-business owners. However you’ll eliminate that problem by learning what records the IRS expects.
One Small Step For Bookkeeping, One Giant Leap For Your Small Business
Keeping good financial records has its payoff. In fact, it’s one of the key steps in building a good, and more importantly, successful business. Accurate bookkeeping makes it possible for a business owner to determine the exact financial condition of his company. More significantly, accurate bookkeeping from a small business is often the first step into the realm of top competitors in the ever changing market place.
Large and medium-sized companies have the resources to form an internal accounting department to do the books, which gives management enough time to do the more important parts of business management like formulating marketing strategies and creating new networks. But for small businesses who have limited budget and number of staff members, monthly bookkeeping just seems like such a daunting task, especially if you add it to the list of other duties to keep everything running. Fortunately, small business bookkeeping doesn’t have to be so grueling anymore. Monthly bookkeeping services are now available online and are quite affordable. This cheap yet effective means of bookkeeping provides the same efficiency and accuracy a private accounting firm gives its clients. Online bookkeeping is a practical way for small businesses to get to where they want to be, when they want to. It’s like professional bookkeeping made to-go!
Online bookkeeping is exactly like doing the books on paper except it’s done faster. It gives the small business owner the same standard set of bookkeeping reports a big company would get from an accounting firm. A basic bookkeeping report, when done correctly, should be able to answer these questions: 1. How much income are you generating every month, and how much will you be expecting in the future?
2. How much cash is under your list of receivables and when will they turn to actual cash? 3. Which of your product lines or services are bringing in the most amount of profit, breaking even, and/or draining your resources? 4. How do the data compare with last year or the last quarter? 5. How do the data compare with projections? 6. How do all these information compare with the competition? Are you leading or falling behind?
Providing precise answers to these questions is possible through online bookkeeping or “outsourced bookkeeping” as others would call it. Investing a little money on quality and accurate bookkeeping services gives you the advantage of foreseeing the things that matter most for a thriving and successful business. Professional online bookkeeping will help you monitor the progress of your business, prepare necessary financial statements for end-of-the-month reports, identify receipt sources so you can separate business from non-business ones, keep track of deductible expenses, and prepare your tax returns. This cheap yet efficient way of bookkeeping will also allow you to fulfill your checklist for a well managed company. You’ll be able to out a check on items such as:
-Increased profitability -Efficient operations -Properly categorized business assets, liabilities, income, and expenses -Clean tax record -Good relations with my banker -Satisfy the IRS
Once you’ve put a check mark on these factors, then you’ll be sure to stay on top of the game-all this with a simple click of a button towards fast and efficient bookkeeping. In addition to all the above listed benefits of small business bookkeeping, you’ll also be put a step ahead in making your cash flow plans so you know exactly where you stand on a daily, monthly, and yearly basis. This way, you’ll have a more precise map of which direction to take in the future. Subscribe to a bookkeeping service and start focusing on what matters. Why not take advantage of online bookkeeping?
With tax time here, now is the time to consider how you want to claim — the standard deduction or file an itemized income tax return. Why should you do this? It’s simple. Often overlooked deductions can make a HUGE difference in lowering your tax bill if you decide to itemize.
The standard deductions are fine for those who have an uncomplicated tax situation. But the amount of your mortgage interest payments, state taxes, property taxes, charitable contributions and hurricane losses, if any, could be more than the standard deduction that is given. What does this mean? If you do not itemize, you may not save as much as you are entitled to. With this in mind, you should take a look over the following list of often missed credits and reductions before you start the process of completing your 2009 tax return:
1. Education Expenses: There are many education related deductions and credits available to you if you are making tuition payments, paying off your college degree or student loan interest or just saving for your child’s education. You then owe it to yourself to check out the explanation of education tax benefits available on the IRS website. http://www.irs.gov
2. Deductions for Home Office: Are you self employed? Is your home office your principal place of work? Is your gross income more than your related deductions? You should then be able to claim this deduction. Are you employed by a company? If so you can deduct the home office ONLY if it is for your employer’s convenience. You MUST also pass the “exclusive use” rule to qualify for deducting a portion of your home’s expenses, including mortgage interest, real estate taxes or rent, utilities, property maintenance (mowing, snow removal) or even repairs. Caution, this is a RED HOT issue for the IRS so be certain you pass the “exclusive use rule”. If you don’t have an office in your home, you may still deduct your mortgage interest and real estate taxes on both your main residence and any second home.
3. Deductions for Charity: You can deduct all that you have given to charity, especially if you have given cash gifts, or in-kind donations of clothing, toiletries, food or appliances that you can then deduct at fair market value. You should go through your receipts and your credit card statements to make sure you don’t forget all that you have given. Only donations to 501 (c)3 organizations qualify. If you donate items other than cash and the amount is over $500, you must have a receipt from the organization who received your donation. Also remember that the IRS will want to see proof of cash donations, such as checks, stubs or statements from the charity.
4. Miscellaneous Expenses: Did you know that gambling losses, job search expenses, safe deposit fees, subscription to investment publications and even tax return preparation expenses could be claimed as tax deductions? Also, unreimbursed business expenses may be eligible to be claimed as a deduction. Your total miscellaneous expenses, however, must exceed 2% of your adjusted gross income to qualify.
5. Don’t pay in cash: Cash may be convenient but it’s also practically guaranteed to be forgotten come tax time, unless you’re one of those folks who’s great at writing down every single purchase. In some cases, if you do not get a receipt when you pay in cash, you will be unable to make a deduction. When you can, write out a check or use your debit card so you can prove the purchases for the doctor visit, charitable donations and business expenses; the IRS considers a canceled check or credit card/debit card receipt to be appropriate for purposes of record-keeping.
6. Other itemized deductions: Florida doesn’t have an income tax, so for the year 2009 Form 1040, you may deduct sales taxes you pay. You can either use your actual sales taxes paid or use the IRS table. If you don’t itemize, and use the IRS table, then you can also deduct the sales tax you paid on big ticket items such as Cars, Furniture household items like a new kitchen. Also, if you are a teacher, you may deduct up $250 for any school supplies you purchase. This year the energy tax credit has been extended, so if you purchased a new water heater, air conditioner, solar device, or impact windows, you might be entitled to a $1500 tax credit
7. Capital Losses: With the market downturn in 2009, you can deduct up to $3000 in NET losses on investments. Any losses in excess of that may be carried over to 2010.
8. Earned Income Credit: Those taxpayers whose income is below a certain level and who have dependents may also qualify for additional tax credits. If the credit results in a refund, the IRS will mail it to you.
9. Education and Child Care Credits: Depending on your circumstances, you may be eligible for tuition payments for your dependents’ college expenses. For those of you who have children in daycare, there is also a credit for the amount you pay to your daycare provider. You MUST have a receipt from the provider listing their name, address, amount you paid and their Tax Identification Number.
10. Medical deductions: Be sure to include your payments for medical insurance if you receive Medicare. You may also be able to deduct medical insurance premiums, co-pays, other out of pocket expenses, hospital, doctor, dentists and any other medical visits. Remember that there is a 7 ½% take away before you can itemize.
11. LASTLY: Be sure to include ALL your W’2’s, Form 1099’sand any other documents which report income to you, such as bank or brokerage statements.
Tax Deduction Checklist The best tax deductions checklists are found in three places:
Your past years’ tax returns 2) With your tax professional 3) Through an online tax website
The IRS website provides plenty of useful information on tax filing which could end up saving you a lot of money on this year’s tax return. Take a few minutes to go over all the information you have on taxes so you can save yourself the most in the end.
CHOOSE YOUR TAX FILING METHOD! You may wish to hire a tax professional if you have had any major changes to your income such as an inheritance, lottery winnings, an investment windfall, or the like, or simply feel overwhelmed at the thought of the task. On the other hand, if your goal is to prepare your own tax return, there are great software programs for help with tax preparation, such as TurboTax, Quicken, or TaxAct. These programs are inexpensive and will walk you through your tax return with a series of questions that make it a relatively painless process. INFORMATION PROVIDED ABOVE MAY NOT BE OF USE TO YOU AND THEREFORE YOU SHOULD CONSULT A TAX PROFESSIONAL CONCERNING YOUR ELIGIBILTY TO USE A DEDUCTION. EVERY PERSON’S SITUATION IS UNIQUE.
About the Author
Stu Lieberman has been in the Credit Counseling and Debt Consolidation business for over 14 yrs writing articles and information for several sites
[mage lang="en|es|fr|en" source="answers"]business tax deductions checklist[/mage] Small Business Tax Deductions
There are a large number of tax deductions for home business owners. If you have your own home based business, it is imperative that you learn as much as possibly can regarding the tax deductions that you can take part in. You are entitled to many interesting deductions that you may not had previously known about. Throughout this article, I will be sharing with you some information regarding this important tax information. If you want to save as much money as you can and enjoy all the benefits that the Internal Revenue Service can offer you, you should keep reading!
The most common tax deductions for home business owners involve the computers, peripheral devices, computer software programs, hardware, and related supplies. The great thing about these types of tax deductions for home based business owners is that they can be deducted at full cost. In addition to these items, you may also deduct the cost of your telephone bill, your internet bill, and any other services that have a direct impact on the overall success of your business. All of these deductions are considered to be legitimate by the IRS, and you can reap many benefits as far as money when it comes to your tax return by claiming them.
If your business requires you to travel, you can actually claim the expenses associated with travel as a business expense on your income taxes. You will need to keep track of the miles that you travel in your car that are related to business, your fuel receipts, receipts for vehicular maintenance and similar records. There is a certain percentage that is issued on tax returns for these miles. In addition to this, if you use another means of travel like air or train, you may write this off as well. Hotel accommodations, and the food that you purchase while traveling are also considered legitimate tax deductions for home business owners.
Most individuals who have a home based business actually use a specific room in their room in order to conduct their work. If this applies to you, this opens up the door for many different tax deductions. You may receive credit for a certain percentage of your rent or house payments, the utilities of your home, and more! It is absolutely imperative to ensure that you are fully prepared to provide proof of all of the deductions that you select to use. However, most of the time, the IRS will understand that there has to be sufficient work space in the home to conduct business and there are no issues.
As you can see, there are a number of tax deductions for the home based business owner. If you run your business in your home, you may be very surprised at just how much you can receive when it comes to tax deductions. It is best to get an accountant that is familiar with tax deductions and what can be allowed for businesses that are owned and operated from the home. This will prove to be extremely beneficial in saving you money during tax season. It may even give you a little bit of money in return!
Chris Simpson is dedicated to helping people find honest and legitimate work at home careers and home based business opportunities. Find legitimate work from home jobs and online business opportunities today at: http://www.HomeNetPro.com
Is Turbo Tax really that easy to use?
I see the commercials on just about every channel on how easy it is to use. I wish they would actually show what type of questions are asked in details to give me a good idea. I am self employed from home and have to manage personal and business related info for deductions, and I really do not trust that my CPA is doing all she can to give me the best discounts (especially since I make little money but owe thousands of dollars in taxes per year). After taxes are paid I hardly have any money left which doesn’t seem correct to me. Plus I have created my own script that sorts out all of my business expenses by category, so all of the numbers are added up already and just have to be inserted into the tax fields so I am sure I should be able to do that.
However I am afraid to risk doing it myself if there is something I do not understand, since such a mistake could cost me thousands of dollars. I am located in TN, USA btw.
turbo tax is probably the worst tax program out there on the market, even the known credits that most people are entitled to, it will short change people on their refunds not just by a few dollars but hundreds.
If your not pleased with your CPA then why not look for someone else? If you do not make quarterly tax payments you might want to consider it.
Your right even a simply mistake can causes you thousands of dollars not to mention an audit which can take up valuable time.
A tax program is only as good as the persons knowledge of tax, there are many deductions that these tax programs do not point to for a lack of a better word, if you do not already know your allowed to take them.
Im pretty sure you can try turbo tax for free, just get your refund amount and compare that to what your CPA comes up with. Its also true some CPA just want the money and don’t try to make their customer happy, but that can be said for other tax preparers.
Ask your CPA questions, audit your return, even though a CPA does your return, ultimately your responsible for what goes on there.
Federal tax doesn’t make a difference of what state you reside, state taxes are the only thing that differs from state to state.
Go with God.
{Income Tax Savings} This VIDEO Will Save You $7234 Per Year In Your Home Based Business!
When you’re looking for help buying or selling property, it’s important to remember that the terms “real estate agent” and “Realtor” are not synonymous.
Realtors can provide an extra level of service and to be a Realtor you must be a member of the Canada is the Canadian Real Estate Association (CREA). A Realtor has earned a strong reputation for actively championing private property rights and working to make home ownership affordable and accessible. CREA members adhere to a strict code of ethics founded on the principle of providing fair and honest service to all consumers.
Realtor business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or board members. This local oversight keeps Realtors directly accountable to the individual
consumers they serve and therefore the consumer is more likely to find better service and
accountability by using a Realtor.
MISTAKE #2. COMPLACENT MARKETING WHEN SELLING A HOME
When selling your home there are no guarantees that the ultimate buyer of your home will have simply walked through the front door. In many cases you may have to bring your home to the buyer.
Effective marketing will help ensure that your property receives maximum
exposure to attract a ready, willing and able buyer in the shortest period of time.
Ask your Realtor to list for you all of the ways he/she intends to market your home and on what time-line. Also, be sure to ask about the home being advertised on the Internet.
MISTAKE #3. TAKING FOR GRANTED THE “CURB APPEAL” OF YOUR HOME
When you’re preparing your house for sale, remember the importance of first impressions.
A buyer’s first impression can make or break whether they even want to go inside for a look. It is estimated that more than half of all houses are sold before the buyers even get out of their cars. With that in mind, be sure to stand outside of your home and take a realistic “fresh look” and then ask yourself what can be done to make the “curb appeal” improve. Also ask your Realtor’s opinion as to how to improve the curb appeal. It could make a huge difference in your final sales price.
MISTAKE #4. FORGETTING ABOUT HEALTH AND SAFETY ISSUES
Be up front and disclose to your Realtor any problems with the property.
The problems are going to be discovered anyway. A decade ago, health and safety issues were rarely a part of the typical real estate transaction. Today, however, it’s common for inspections relating to health, safety, and even environmental concerns to be a part of most sales contracts. Moreover, in many provinces, the seller must disclosure to the buyer any knowledge of existing property problems. In many cases, these issues have been or can be factored into the home’s listing price.
MISTAKE #5. THINKING YOU NEED TO BE IN THE HOME TO EXPLAIN THINGS TO A PROSPECTIVE BUYER
You will be better served if you allow your Realtor to do their job without you there.
Most potential buyers usually feel more comfortable if they can speak freely to the real estate professional without the owners being present.
If people unaccompanied by an agent request to see your property, you should refer them to your real estate professional for an appointment.
MISTAKE #6. FORGETTING WHAT YOU WOULD WANT TO SEE IF YOU WERE THE BUYER OF YOUR HOME
Remember that although people can be different in personality, they tend to be the same
when it comes to expectations at someone else’s expense. In other words, a prospective buyer would probably like to see a perfect home from top to bottom, inside and out, when it comes to your home. Try to do as many of the following items as possible to improve the likelihood of your home sale in an expedient way.
On the outside
1) Sweep front walkway.
2) Remove newspapers, bikes and toys.
3) Park extra cars away from the property
4) Trim back the shrubs.
5) Apply fresh, clean paint throughout.
6) Clean windows and window coverings.
7) Keep plumbing and all appliances in working order.
Maintain all sealant (window, tub, shower, sink, etc.) in good condition.
9) Make sure roof and gutters are clean and in good condition.
10) Mow the lawn frequently and plant flowers.
11) Keep pet areas clean.
On the inside
1) The kitchen and bathroom should shine.
2) Quick once-over with the vacuum; carpets should be clean.
3) Place fresh flowers in the main rooms.
4) Put dishes away, unless setting a formal display for decoration.
5) Make all beds and put all clothes away.
6) Open the drapes and turn on lights for a brighter feel.
7) Straighten closets.
Put toys away.
9) Turn off television.
10) Play soft music on the radio/stereo.
11) Keep pets out of the way and pet areas clean and odor-free.
12) Secure jewelry, cash, prescription medication and other valuables.
13) Enhance the spaciousness of each room.
MISTAKE #7. NOT KNOWING HOW TO PRICE YOUR HOME TO SELL
Perhaps the most challenging aspect of selling a home is listing it at the correct price. It’s one of several areas where the assistance of a skilled real estate agent can more than pay for itself.
Listing the home too high can be as bad as too low. If the listing price is too high,
you’ll miss out on a percentage of buyers looking in the price range where your home should be.
This is the flaw in thinking that you’ll always have the opportunity to accept a lower offer. Chances are the offers won’t even come in, because the buyers who would be most interested in your home have been scared off by the price and aren’t even taking the time to look. By the time the price is corrected, you’ve already lost exposure to a large group of potential buyers.
The listing price becomes even trickier to set when prices are quickly rising or
falling. It’s critical to be aware of where and how fast the market is moving – both when
setting the price and when negotiating an offer. Again, an experienced, well-trained agent is always in touch with market trends – often even to a greater extent than appraisers, who
typically focus on what a property is worth if sold as-is, right now.
MISTAKE #8. NOT PLANNING YOUR MOVE EARLIER ENOUGH
Many sellers simply don’t plan their move early enough and then feel totally overwhelmed at the time of moving out of the house. If you are able to move at any time of the year, don’t wait until summer, the peak-moving season.
Consider also that the first and last few days of the month are extra busy. If you plan to sell your house, get it on the market as soon as possible. Keep a record of all expenses related to the move, some of which may be tax deductible.
MISTAKE #9. NOT LISTINING TO THE PROFESSIONAL YOU HAVE HIRED TO SELL YOUR HOME! You’re not a Realtor, you may work in a factory, you may sell cars, you might even be a doctor… But the one thing you are not is a PROFESSIONAL REALTOR.
About the Author
United Pro Media! Does anyone know about this multi-level marketing company. Risks? Safe? Any info please?
This is a new venture in to western canada. I am told it is big in the USA and eastern canada. It is multi-level marketing, looks kind of like a pyrmaid, but am told it is not. It is investing in a company and their advertising market. You do not sell the products, but promote them and in turn you then have a home based business and therefore tax deductions. If anyone is familiar with this or has any information on United Pro media it would be appreciated
www.scam.com/ this web site gives info on most scam when i search that’s where I end up
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Maintain all sealant (window, tub, shower, sink, etc.) in good condition.