10 Key Tax Deductions for Your Small Business, by Kylie Ora Lobell

Tax Day is coming up fast, which means that you have to get your finances in order as soon as possible. If you don’t, you may forget to take some key small business tax deductions. These tax write-offs could end up saving you a lot of money if you utilize them correctly.

Although some items are clearly tax deductible, including office rent, utilities, and employee costs, others may not be so obvious when filing taxes. Aside from hiring an accountant to assist you, it pays to do research on your own as well.

Are you unsure about which small business expenses and tax write-offs you can make? Look no further. The following is a list of tax deductions that you may want to claim when doing your tax preparation this year.

1. Furniture

Did you buy furniture for your office this year? If so, it’s tax deductible, and you can claim your chairs, desks, and couches as small business expenses. You’re able to either write off the full amount, or use the seven-year depreciation method. While you have the option of deducting the entire cost in the year in which you put the items in service, depreciation may be more favorable if you expect your tax bracket to rise in the future.

2. Home Office

If your home office is your primary place of business, or it is where you meet with clients and customers, you can deduct certain home office expenses. To figure out how much your tax deduction will be, measure your home office and divide by the total square footage of your home. This percentage determines the amount of your mortgage or rent, utilities, and expenses related to your home office that you can claim.

3. Travel Costs

If you’re traveling for work, chances are, you can take deductions for taxes on all of your costs. This includes airplane and train tickets, baggage fees, hotels, Wi-Fi access, business use of your car, etc. If you eat out while traveling, only 50 percent is deductible.

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How to Avoid a Small Business Audit By The IRS, by Brendon Pack

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During tax season and throughout the year, IRS agents carefully review every tax return that comes across their desks. However, agents take a second glance if they catch something on a return that seems abnormal. This may result in an IRS auditduring which the IRS contacts a taxpayer to clarify certain information.

The IRS audit process varies based on the extent of the information needed, and an audit can be for an individual taxpayer or a business. Taxpayers typically receive an audit notice in the mail to begin the process. Or, an auditor may visit your business in person to examine certain financial records. It can take several months – or even a few years – to fully resolve an audit.

If you’re wondering how to avoid an IRS business audit, use these tips:

1. Adopt a formal entity structure for your business.

If you work as a sole proprietor, the IRS will likely give your tax return some extra attention automatically. So, why not set up a formal LLC or corporate entity? Doing so can give your enterprise more credibility, allowing you to claim deductions and other tax-saving measures without fear that your activities will be examined more closely. Simply registering a formal entity for your venture can help reduce your risk of a small business tax audit.

2. Always file a completed business income tax return.

There are many taxes for small business owners to be aware of and ultimately cover on their IRS returns. After your income tax return has been completely filled out from top to bottom, review it with a keen eye. Be sure that every line that is applicable to your business tax situation is filled out completely and correctly. If you send an incomplete tax return to Uncle Sam, the IRS may question why you failed to disclose certain information on your return. This could trigger an audit.

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