Greg Jones, CEO of BookKeeping Express, contributed this article to BusinessNewsDaily's Expert Voices: Op-Ed & Insights.
If you own a business, now is the time to begin thinking about your 2013 tax return. Before you know it, tax day will be here and tax season will be under way. Advanced planning and preparation can help ensure that your business is ready for tax season.
Here is a look at what you should be doing between now and the end of the year in order to properly prepare for your 2013 tax filing.
Keep Good Records
The first and most important tax tip is to maintain a complete and accurate set of books as well as adequate documentation. In other words, keep your receipts! Without proper documentation, the IRS may disallow your expense. Good recordkeeping goes a long way toward ensuring that nothing is missed.
Keep Business and Personal Expenses Separate
The IRS scrutinizes personal expenses that may have been claimed as a business expense. Maintain a separate bank and credit card for your business.
Deduct to Your Advantage
For starters, it is beneficial to take note of certain deductions that allow you to subtract business costs from gross income. There are a handful of business expenditures that qualify as deductions, including:
- Save on start-ups — The costs of launching a business are considered capital expenses and you may deduct $5,000 your first year in business.
- Business-related education — You can deduct educational expenses that maintain or improve skills required in your present employment, this includes seminars, classes, convention fees, etc.
- Deduct on driving — Commuters may have missed the news that the fiscal cliff legislation signed by President Obama contains a provision that allows employers to offer up to $240 a month in tax-free benefits to employees who use public transportation or a vanpool to get to work. That's an increase from $125 a month under old IRS rules. Employers can get a tax deduction by providing the Commuter Choice benefit or can save on payroll taxes by allowing employees to use pre-tax dollars to buy transit passes or pay vanpool costs. Employees save on federal income taxes.
- Perks of working from home — Not only does a home-office allow you to work in last night's pajamas, it also makes you eligible for home-office deductions. As long as the designated "office"space within your home is used exclusively for business purposes, you might be able to deduct a handful of things ranging from a portion of your rent and utilities to Internet costs and repairs.
- Self-employed health insurance deductions — Self-employed health insurance deduction is one of the most significant deductions you can take as a small business owner. You may be qualified to deduct premiums paid on qualified long-term-care insurance, medical and dental insurance not only for yourself, but for your spouse and dependents that are under the age of 27.
E-file for Free
Tax payers making $57,000 or less may be eligible to use free tax preparation software and electronic filling. The software completes the forms from a series of questions that allow you to input your information. Those making in excess of $57,000 can e-file for free using free fillable file forms, which provide the forms, but do not include the tax preparation software.
Utilize the Small Business Jobs Act Tax provisions
This was signed into law in 2010 by President Obama, and it has nearly 20 initiatives aimed at decreasing the tax burden and providing savings for small businesses.
The views expressed are those of the author and do not necessarily reflect the views of the publisher.