(NewsUSA) – Running a small business can be tough, and keeping the money you earn in your pocket can be a challenge, especially at tax time. Check out these tips to help ensure you don’t give more money to the government than you must:
1. Deduct everything you can. The IRS has a variety of ways it helps small businesses, but many owners don’t take full advantage of all of the deductions they can claim. For example, if there’s a place in your home that you use exclusively for business, you can deduct some of your housing costs. For your 2013 return, you can claim $ 5 per sq. ft. of your office up to 300 sq. ft.
Mileage is another overlooked expense. You can deduct the miles you drive for business, such as driving to see a client or pick up supplies. Every trip counts, even the short ones, so it pays to keep track of your business mileage. Small businesses can deduct 56 cents for each mile travelled.
Other deductions small businesses are eligible for include travel expenses like tolls and parking, 50 percent of meals with clients, as well as supplies and furniture for your office.
2. Use the right business structure. Small businesses can be structured in various ways, and choosing the right structure for your particular business can affect how much or how little you pay in taxes. Most small businesses choose to operate as a sole proprietor, Limited Liability Company (LLC) or corporation. A tax specialist can advise you which structure is best for you, but as a general rule of thumb, if your business generates more than $ 50,000 in profit, you can save taxes by incorporating.
3. Don’t get penalized. Many small business owners end up paying more to the government because they file late, resulting in the IRS charging interest, late fees and penalty fees. Missing deadlines is often the result of not being organized, which is all too common for owners focused on generating sales and servicing clients, rather than maintaining their books.
To keep organized, many owners are taking advantage of technology and turning to cloud-based systems like FreshBooks (www.freshbooks.com), which makes it easy to stay on top of accounting tasks like invoicing and expense tracking. Such systems also allow the owner to send their accountant all the reports and information they need with one click.
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