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Hey, boss babes. We see you killing it out there. You’re doing awesome (as expected), but there’s one area of entrepreneurship we don’t really like talking about this time of year. It’s a dirty word no one likes to mutter… taxes. Ugh. Don’t worry we are here to help you out.
Even the thought of taxes can scare off anyone who’s not aware of how they work for small business. But here’s the thing—when you know how the system works, you are much more likely to have a happy tax season instead of a daunting one.
The thing is, there are some tax tips just for entrepreneurs that will help you save a lot of money on your yearly taxes. Since we are focused on our businesses we do not learn about these laws. But that doesn’t mean you should be missing out on valuable tax deductions just because you’re busy!
Below, we’re going to go over the top five tax tips that will help you a ton during tax season, so you never have to wonder if you’re missing out on a better tax situation.
Tax Tip 1: Ask For Help
It’s no secret that we entrepreneurs are used to taking care of everything ourselves. Especially if our budgets are limited, it’s just more cost-effective to take matters into our own hands. For things like marketing and social media, that can be OK, but for taxes, we’re better off using a professional.
Chances are, you don’t know much about taxes. Guess who does? Tax Professionals! Don’t be afraid to get a CPA to help you file your taxes—the time you save trying to figure out all the nitty gritty details will be well worth it when you can expend your energy on what matters most: your business.
Another option is to use tax software. There are lots of tax softwares to choose from and have a cost small fee to purchase them each year. You can test these out by doing your federal taxes for free. If you like how much the software helps you can buy the full version.
TIP: To stay on top of your invoicing, expenses, payments, projects, mileage, accounting throughout the year,FreshBooksis a great option and isone of the most trusted resources for people who are self employed. Keep track of everything in one place!
Tax Tip 2: Home Office
Working from home to build your empire? You’re in wonderful company. Lots of entrepreneurs choose to work out of a home office because of the great opportunity to deduct partial housing costs(such as yourr-22 refrigerant price).
As long as your home office is the principal place of your business and you use it regularly and exclusively for business, the IRS says you can write off the rent or mortgage expense that relates to this part of your house. The same goes for a garage or free-standing structure that qualifies under those same requirements.
Now, you won’t be able to write off your entire monthly house payment, but you will be able to deduct based on the percentage of your home used exclusively for business. So that means you’ll have to calculate the square footage of your home office in relation to the rest of your home.
Tax Tip 3: Record Mileage/Travel Expenses
If you to travel a lot, you would be remiss to not record every single expense. That includes everything from your gas to your mileage to your flight costs—pretty much everything you spend on business-related travel can qualify as a write-off, but you need to have receipts and records to prove it. It takes a little work on your end to ensure you’re collecting all the necessary records, but tools like this mileage calculator can certainly help.
For a full rundown on which travel expenses are deductible, the IRS actually does a great job explaining them in this article. You’ll see that everything from parking costs to dry cleaning fees can be written off if you do it correctly.
Tax Tip 4: Health Insurance
If you had to set up healthcare specifically for your business—maybe you’re a personal trainer or do other physical work—then your monthly premiums are eligible for deduction. Just remember that the health insurance should be directly related to your business if you want to write it off.
There are, of course, some exceptions (because taxes are so fun!), so we recommend reading up on the IRS’s guidelines on the matter. Additionally, if you choose to work with a professional, you can get more questions answered. Referrals from fellow business owners will help you rest assured you’re in good hands with someone who has your and your business’s best interests in mind.
Tax Tip 5: Know Your Deadlines
Finally, none of these deductions would be helpful to you if you don’t file your taxes on time. We’re assuming you want to save as much money as possible when filing your business and individual taxes, and being late to file does not accomplish that. If you don’t file on time, you will likely have to pay a late fee of at least $135.
Because filing dates can differ for individuals and corporations, it’s smart to brush up on the tax calendars to ensure you’re on-time. You can easily find out when you’re supposed to file using the handy filters here. Once you know when your taxes are due, we recommend making note on all of your internal schedules and calendars so you do not miss the date. It would be a shame to have to pay extra fees in addition to your taxes!
Conclusion
Tax season isn’t fun for anyone, but it’s always a little less fun for entrepreneurs because we don’t typically get a return. Being aware of all the possible deductions you can make as a business owner, though, will certainly help alleviate the financial burden come tax time. There’s a lot you can write off—you just have to know your options so you can prepare!
Just remember to take note of deadlines and consider using either a CPA or online filing resource… You’ll thank yourself later.
Britney Cooper is a world traveling freelancer. She is passionate about entrepreneurship, travel, and technology. When she isn’t writing, you can usually find her out on a hike or trying to book a flight to her next adventure.
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