Three big ways small-business owners can save on taxes
(BPT) – If you own a-small business, every dollar matters – especially when it comes to taxes. Whether your business-is a partnership or corporation, Uncle Sam offers some sizeable deductions to-lower your liability, allowing you to put those dollars toward capital and-employees.
Easy-to-use-tax preparation solutions have become-an increasingly popular way for small-business owners to-navigate-deductions and-tax law changes. The programs ask simple questions about business income and expenses to help maximize your deductions. Solutions, such as the value leader-TaxACT, allow you to use their online solutions for free and only require payment when you’re ready to file.
TaxACT-spokesperson Jessi-Dolmage-shares three ways to-reduce your small-business taxes.
Buy to save
Whenever buying new equipment, technology, software or even furniture for your business,-save those receipts-and keep detailed records that include purchase price and date placed into service.-You should be able to substantiate any expenses you-claim-on your tax return.
The 2013 Section 179 deduction limit for-new and used assets purchased-is-$500,000. However, your business must be profitable in order to receive this benefit in 2013. In 2014,-the dollar limit-drops-to $25,000 unless Congress extends this tax break.
Bonus depreciation of 50 percent of the cost of new items expires at the end of 2013. Depreciation-can be claimed whether or not your business is profitable.
Tis always the season for giving
Company donations of money, supplies and property are all deductible expenses. So are-bonuses-(and-associated-payroll taxes)-awarded to-your employees, partners and-officers.-If-your business is an-S Corporation,-keep a close eye on officer compensation to-ensure-you-meet-IRS requirements-and-thus avoid penalties.
Give yourself the gift of education.-Take-a class or seminar-or-attend-a convention that helps you maintain or improve skills required for your business.
Business is sometimes-personal
If-you use your-home for your business,-you may be able to deduct-mortgage interest, insurance, utilities, repairs and depreciation.
Corporations and partnerships can also-deduct actual expenses for non-personal uses of your personal vehicle, as well as reimbursements to employees for business use of their personal vehicles. Actual expenses may include costs-for fuel, maintenance and parking fees. Your detailed mileage records should include date, total miles, tolls, parking and purpose of trip. You can also deduct vehicle depreciation and loan interest.
The bottom line
Small-business owners-have-year-round-opportunities-to cut their taxes.-Dolmage-recommends doing a dry run of your taxes with-an online or download solution like-TaxACT-before you actually file to identify potential savings.-Answer simple questions about your expenses and revenues, and the program will do the rest so you can see how moving revenue and expenses forward or back may change your taxes.
To make tax time easier,-TaxACT-also offers a free mobile app for organizing your tax documents throughout the year.-Take a picture of-receipts, statements and tax forms-with-TaxACT-DocVault, then save up to 3 GB of digital images on-TaxACT’s-secure servers. At tax time, import images into-TaxACT-to save with your 1040, 1065, 1120 or 1120S tax return.
Get more business tax tips at-www.irs.gov-and-learn more about-TaxACT-Small Business-solutions and-TaxACT-DocVault-at-www.taxact.com.