Tag Archives: expenses

Tax Preparation

Time To Think About What To Put Together For Next Year’s Business Taxes

Back in September 2012 we had a post titled Are You Preparing For Next Year’s Taxes. In that post we gave some general ideas of things you should have started preparing early to give to your accountants, or to have if you’re doing your own taxes, for the next year. Since it’s hard to get people moving that far in advance we decided to do it in December this year. So while you’re thinking about Christmas or other holiday gifts, keep these things in the back of your mind:

1. Mileage. We had mileage in our previous post but we’re taking it a bit further. Our hope is that you at least kept a calendar of all your business events and travel for the year, even if it was just meetings or business luncheons. Maybe you kept receipts from the post office or Fed Ex; if you had to drive to those places that counts as business mileage. Educational seminar; you can use the mileage for that as well. If you’ve kept up with it all on a monthly basis this will be a snap; if not, well, it’ll take some time, but it’ll be worth it.

2. Receipts. Do you keep all your business receipts in one place? Are they in order? They don’t necessarily have to be for some accountants but if you can help out they’ll appreciate it. If you work in a home office do you have expenses that your business takes a chunk out of such as internet access, utility bill, cellphone bills or things like that? Hey, every little bit of expense helps.

3. Amount of pre-paid taxes. Whether you’ve paid a lot or a little, it all helps your accountant figure out just what you owe. You might have to indicate it on a bank or credit card statement but hopefully you’ve kept track of it in some fashion.

4. Advertising and other business expenses. Sometimes people don’t think about this as a business expense if all that was done was printing some letters and mailing them out but if you spent money doing it, it counts. If you have a website how much as you paying for hosting and for your domain name? If you paid someone to write for you that’s another expense you get to claim.

Just a few things to help get your mind thinking about expenses to help you pay less on your taxes in the coming year; good luck.
 

Tax Preparation

Why Business Write-Offs Help You When It Comes To Taxes

In our last post on business tax write-offs, we gave 5 examples of things you can write off, along with providing links to other things you can write off. As cool as this might seem, you might wonder why it’s of benefit to do such a thing, and whether it can help anyone else who might not officially be a business.

It’s acknowledged by the federal government that businesses have expenses they have to deal with. From office supplies to office equipment to even purchasing vehicles in some cases, it can be fairly expensive to run a business.

We all hope to run our business as some kind of profit, but that’s not always the case. There are times when your expenses outweigh what you made, or times when you didn’t make enough to have to make a tax payment.

However, if you reported something like $10,000 as income, you’d have to pay something on that unless you could show that you had to pay something to try to keep the business going. So you have things like mileage, depreciation on office equipment, advertising costs, and even buying new stuff here and there that counts as write offs, as long as they impacted your business in some fashion.

Much of it counts as a one-to-one event. So if you paid $500 for a computer, you get to write off $500 on your taxes. That’s a great benefit because the government is trying to encourage you to do anything you can to improve your business. Everything doesn’t go that way though. Meal costs, whether you’re entertaining or are eating meals while out of town on business, only get you a 50% discount. Still, it all adds up.

Of course, not everything will be counted at 100%, even though I pulled out meals. If you have a home office you only get to write off a portion of that for business based on the square footage of your home and your office. If you pay for maid service or for someone to cut your lawn, the same type of thing applies.

It can get really complicated, and most people have no real idea of all the types of things they can write off to bring their tax liability down. That’s why it’s a good thing to have a tax accountant to help you figure it all out.

By the way, there’s no shame in having your business being run at a loss; that’s how many large corporations end up getting refunds every year, even those making billions. It’s all in keeping great records and finding ways to build up the expenses at the same time you’re increasing your revenue. A good accountant will help you do all of that.
 

Tax Preparation

Are You Preparing For Next Year’s Taxes Yet?

I hear you now saying “It’s only September; why would I be ready for next year’s taxes already?”

Many people think that they should wait until the new year has begun to start getting ready for the next year’s taxes. As an accounting firm, we tend to disagree with this for many reasons.

One, what we find is that people will put things off until the last possible moment, and then suddenly start scrambling around trying to pull everything together at the last minute and are unable to find everything they need. Remember, you get to write off your business expenses, but if you’re unsure of all of them you’ll miss out.

Two, if you’ve been writing your mileage down but not properly logging it, if you do it ahead of time that’s one less task you’ll have to deal with later on. Keeping track of it monthly helps you to remember which part of travel was for business and what wasn’t business travel. For instance, if you took a quick trip to an office supplies store and bought something you’ll use in your business, in six months you’ll have forgotten that you did that and missed the opportunity to claim that mileage.

Three, sometimes you forget what items were business expenses after awhile. For instance, if you’re a corporate consultant your business clothes are a legitimate write off, and if you remembered to keep the receipt and write something on it so your accountants know, that’s a good thing. But if you just tossed it into a receipts folder and now it’s months later, you might not remember what that purchase was for unless you went to a specialty shop specifically for clothes.

Four, you might want to think about paying some of your estimated quarterly taxes if your income was high enough so that it’ll reduce some of your tax payments for the new year. This means you’ll have had to be tracking your income as well to make sure you don’t pay too little or too much. And you’ll want to make sure you’ve indicated in some fashion on your bank statements which payments went to that.

Five, bank statements. Sometimes it’s not enough to have them, as you know. For your business account, if you make money in multiple ways and you want to track it all then you probably go through the process of pulling out your statement and going through it marking everything. If you do it ahead of time you’ll save yourself the frustration of coming to certain items and wondering what they were.

These are only some of the things you probably want to think about ahead of time, and with only 3 months left in the calendar year, getting a jump on things would probably ease your mind a bit.