6 Tax Tips Small Business Owners Need to Know
th deadline, but some might not know how many little things they can do come tax time. Before you file, make sure you’ve checked and double-checked using Pango’s small business tax tips.
- Keep everything. You can make your tax preparation easier by keeping all receipts, invoices, deposits, in a logical filing system. You never know what documentation you’ll wish you had when it comes time to claim those deductions. If you’re a new entrepreneur this is a great first step in starting your business, and if you’re an established small business owner there is never a bad time to start – you’ll be even more prepared for next year’s filing.
- Mixing business and personal expenses. A good piece of advice is to always use separate bank accounts and credit cards for your business and personal life. But if you use your home or car for your business, you might have the option to deduct part of those expenses. Learn more about the home office deduction to see if you qualify. If you qualify for an auto deduction, consider the benefits of using the standard mileage rate or your actual car expenses to make the most of the deduction.
- Make the most of your giving. Many small business owners show their support for their communities and the people they serve with charitable contributions. One way to make the most of charitable giving is to forego cash gifts in favor of other options. Consider donating your unused or unwanted inventory, if you operate a retail or food business. A larger deduction for you and a generous gift is a win-win.
- Section 179 deduction. If you purchased business equipment in the past year, you might want to take advantage of the Section 179 option that allows you to deduct up to $500,000 in equipment costs. Many of Pango’s clients can find this option helpful for their franchise business, especially when starting up. For restaurateurs, this could be kitchen equipment, for tech startups it could be software packages. Learn more about the Section 179 and its relevant documentation and see if it makes sense for your business.
- Know your corporate structure. Pango’s DreamSpark clients organize their businesses as C corporations, which can have specific tax advantages. Consult our blog post to find out the benefits of a C corp and consider talking to a tax professional about the options for your specific business structure.
- File on time and online. Using tax software and staying mindful of the filing deadline can save you hundreds of dollars in fees. Over the years, those add up to great savings.