Tax time is here and deadlines are fast approaching. Not ready? You’re not alone. But don’t ignore taxes. They never go away.
No matter what you do, file. Something! Even if it’s an extension, says Ray Barlow, VP of Accountant Solutions at Sage North America.
“File your taxes, no matter what,” says Barlow. “At best, you’ll be slapped with fines, and at worst, you could face tax evasion charges. If you owe taxes, file on time even if you can’t pay the entire amount right away.”
Avoid Getting Behind On Taxes
Garrett and Deborah Gregory, a husband/wife team that previously worked for the IRS corporate tax division for more than 24 years combined, have since founded Gregory Law Group, a tax law firm dedicated to helping American taxpayers resolve their IRS problems.
The number one issue that they see with their small business clients is getting behind on their employment taxes. As a business owner with employees, the owner is responsible for withholding the employees’ portion of employment taxes as well as paying the other half themselves.
“When a downturn in business happens, many small business owners stop paying these employment taxes,” says Deborah Gregory. “The IRS moves very swiftly in these situations because they view this as the business owner running the business on their money and the hole gets deeper with every pay period.”
Home Office and Auto and Mileage Deductions
Gail Rosen of Gail Rosen CPA, a certified public accounting firm that provides a full range of tax and accounting services throughout Greater New Jersey and New York, provided some tips on the home office, auto expense and mileage deductions for small business owners.
Home office deduction: Do not be scared to take the home office deduction if you are legally entitled to it.
Auto Expenses and mileage deductions: Try both the standard and actual method to see which auto expense deduction is better for you. Remember; you save a lot of money if one method is better than another.
- Standard Method: in 2015 it is 56 cents per business mile plus tolls and parking.
B. Actual Method: Add up all actual automobile expenses and then multiply it by your business percentage (business miles/total miles for the year).
Hiring Vets, Meals, Travel and Entertainment
Jessie Seaman, Esq., a Managing Licensed Tax Professional for Tax Defense Network, LLC, shares this tax planning advice:
- Hiring Vets: The ‘Work Opportunity Credit’ is not a deduction because it does not reduce ‘income’; it actually reduces the final tax bill, dollar for dollar. The credit is available to businesses that hire Vets for the first time but there are additional guidelines that must be looked at to determine how much the credit is for. Employers must file Form 8850 with their state agency, typically within 28 days of hiring the vet, to get certification.
- Business Meals: Are subject to strict limitations and require a receipt if over $75. The meal, travel and entertainment expenses must match up with the nature of the business.
- Sales tax deductions: State Sales tax, especially on big ticket purchases like vehicles and equipment, is fully deductible.
- Interest on credit cards: Businesses can write off interest paid on credit cards, loans, overdue bills/account payables, and even bank fees (non-Sufficient funds fees or monthly surcharges).
Avoid Stress of Tax Time: Hire an Accountant
How can on avoid the stress of tax time? It’s simple, says Barlow. Hire an accountant.
“Even though using accounting software can make managing your finances more efficient, I recommend working with an accountant instead of going it alone,” says Barlow. “Accountants understand tax, and their expertise and advice can be invaluable in today’s business environment when rules and regulations change frequently. An accountant can help ensure that your business remains compliant and is a critical step in maximizing your tax savings.