4 Business Tax Return Tips
Posted by: Brookside Admin
At this time of year, all Americans are getting their taxes together for their individual returns. It can be a stressful time, but it's exponentially more stressful when you also have to prepare a return for your business. Like your individual return, your business's return, if not done correctly, could leave you open to an audit or fail to claim your full refund. For sole proprietorships, partnerships and limited liability companies, the deadline to file is April 15. But, for corporations reporting on a calendar year, the deadline is March 17. Whatever the size of your business, Brown Kinion and Company can help you get the refund you deserve and make the entire process as easy as possible. A post at Mashable also has some helpful tips for preparing for your business's tax return. Here are the four that we think are the most valuable.
- The Correct Forms
The first step in preparing your business's tax return is choosing the correct forms to fill out. This will depend on the structure of your business. If you're a sole proprietor, your reported business income and expenses will actually be attached to your individual return on a Schedule C. Partnerships, however, report income using Form 1065. Corporations and some LLCs file using Form 1120 or 1120S.
- Home Office
While home office deductions are available to any tax payer, conventional wisdom suggests it's a red flag for auditors because it's often taken advantage of. That said, if you truly meet the requirements, this deduction can add up to thousands of dollars in savings. If you're entitiled to it, you also need to choose the most profitable way to figure the amount of your deduction. You can either take the entire annual cost of your home and multiply it by the percentage of your home dedicated to office space or take a deduction of $5 per square foot of office space with a cap of $1500. Either method is acceptable so it's wise to figure both and take whichever deduction is larger.
- Equipment versus Supplies
The Section 179 deduction allows you to write off the entire cost of any new equipment your office purchased this year, rather than using the depreciated value over multiple years. But, you need to understand the difference between equipment and supplies. Equipment refers to typically high dollar items that last for multiple years. That would be computers, copiers, office furniture, and servers. Supplies, on the other hand, are items like pens, paper, ink. The money spent on supplies can also be used as part of a deduction, but needs to be kept separate from your equipment expenses.
- Insurance Deductions
Depending on the type of business you're filing for, you may be able to deduct multiple types of insurance costs. Worker's comp, liability, malpractice and property insurance is typically deductable for any business, but other business types may be able to deduct the cost of commercial vehicle insurance, life insurance premiums, or even medical and dental insurance for yourself, your spouse and your dependants. There are plenty of potential deductions available related to insurance costs, so it's worth your time to make sure you're claiming everything you're entitled to.
It's important to remember that every deduction adds up. Even small deductions like the price of books for continuing education or deducting your mileage are worth it.
For help gathering the right information, filing with the correct forms and claiming all of the deductions you're entitled to, call Brown Kinion and Company.