The deadline to file your taxes is just around the corner. At this point in the calendar, the U.S. small business environment is divided into of two kinds of people: those who procrastinated – let's just say you work better under pressure – or those who have already sent in their paperwork, blissfully awaiting their refund check while plotting next year's deductions.
No matter which one of these two profiles fit your current state, tax season is a chance for small businesses to recoup important investment costs. But companies with the wrong tax habits could flounder under unnecessary payments or overlook financial prospects that could help grow their enterprise as well as curb costs.
What can a small business do to get the most out of its taxes?
"Personal automobiles shouldn't take a small business's brunt without a payback."
Every year tax regulations change. The shift may be big or it may be little, but knowing the full capacity of whatever alteration applies to your next tax filing could mean hefty refunds or missed opportunities. So how well-versed are you in tax law?
Over the last five years, tax-related initiatives specifically targeting small businesses have been included in both the Small Business Jobs Act of 2010 and even the Affordable Care Act. According to the U.S. Small Business Administration, the various provisions encourage tax alleviation and provide credits that can help cover employee health costs.
Evade the dreaded audit
Nothing will bog down business quite like an audit. It doesn't matter it the IRS knocks on your door because of dishonesty or shoddy record-keeping, the best course of action is to avoid the organization altogether by doing your taxes right the first time.
For example, are your employees actually employees, or are they independent contractors? These are not arbitrary distinctions. Knowing the difference is integral to the filing process. Classifying correctly eludes attention from the IRS as well as back taxes or possible penalties.
Also, don't be vague about what you expect the U.S. government to deduct from your taxes. Giant expenditures without explanations will draw suspicion. If you want it deducted, give it a name. By simply labeling your expenses, not only will you be justifying your business-related purchases, but you'll also be reinforcing the practice of tax organization, which is invaluable if you ever need to look back on previous years.
Every OPEX counts
Keeping meticulous records might seem like penny pinching, until you realize how many millions of pennies may be involved in the process.
Any time a car is used for business, it could arguably be considered an operating cost and is thereby taxable. Heading to a conference out of state? Meeting a prospective client for lunch? A personal automobile shouldn't take the brunt of an emerging small business without a little payback. Commuting, however, is not included.
How much could you save? Companies who log their miles this year can earn back 57.5 cents for every mile they drove according to the IRS.
Did your business move to the cloud this year? Monthly cloud subscription costs could be tax deductible depending on what kind of cloud service your business implements and how you use it. Or maybe your small business is new as of this year? Perhaps it will be next year? A chunk of your start-up costs could also be written off.
Equipment and business industry piece brought to you by Marlin Equipment Finance, leaders in equipment financing. Marlin is a nationwide provider of equipment financing solutions supporting equipment suppliers and manufacturers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.