Seven Last-Minute Tax Tips for Small Business Owners
Perhaps you’re one of millions of small business owners who does his or her taxes at the last minute. Don’t worry, you’re not only in some very good company, but you’ve also had some extra time to think about which deductions you’re going to claim.
Here are seven deductions that you should claim, if you’re not already doing so.
1. Your Home Office
A lot of small business owners work from their home. If you’re using tax software, like TurboTax, you’ll actually be asked about that. Go ahead and follow the prompts. You might find that you get a pleasant deduction.
A home office deduction is also a safe deduction. You won’t have to worry about IRS agents knocking on your door, inviting themselves inside, and taking out a tape measure to ensure that the dimensions of your office are consistent with what you claimed on your tax return.
Depending on your business model, it’s almost certain that anywhere from a small to a large portion of your business relies on software. Make sure that you claim all of those software purchases as deductions. Under Section 179, you can claim the expense of software all at once, instead of depreciating the expense over three years.
Interest is a necessary and ordinary business expense. As such, it’s deductible. If you’ve taken a loan recently or obtained a cash advance with an associated cost of money, then the expense associated with that transaction (whether it’s an ongoing expense or an all-at-once expense) is deductible. Claim that deduction.
4. Social Security
As a business owner, you might already be aware of something known as Self-Employment Tax. Basically, if you work for yourself, then you’re paying both sides of FICA. Normally, your employer would pay 7.65% of your salary and, as an employee; you would pay the other 7.65%. However, when you’re both the employer and the employee, you have to pay both halves, or 15.3% of your income.
Fortunately, half of that contribution is deductible as a business expense. Don’t forget to claim that deduction.
Your office furniture is fully deductible under Section 179. If you bought some new furniture in 2013, grab those receipts and claim that deduction.
6. Office Supplies
Pens, papers, staplers, staples, etc. are all necessary and ordinary business expenses. There’s no reason to think that the IRS will subject you to an audit if you claim normal office supplies as expenses.
7. Insurance Premiums
Are you self-employed and paying health insurance premiums for yourself and your family? That’s great news, because those premiums are 100% deductible. Keep in mind that the annual deduction cannot exceed the amount of your net profit. Also, if your spouse has a job that offers health insurance, you might not be eligible. Check with a tax advisor in that case.
The tax code is complicated. Fortunately, a lot of those complications work to the advantage of you, the business owner. Be sure to claim all of your eligible deductions this year.