Each year small business owners have to file taxes. This article provides the sole proprietors with some guidelines that will allow them to optimize their income taxes.
As a registered business owner, you are allowed to deduct some expenses related to your business. To be able to claim these deductions you should collect all proofs of purchase. You should keep all your invoices and receipts during the 6 years. If you get a paper receipt for your business purchases, keep them all even if you have digital copies. It can give you an additional protection in case of an audit.
If you use your home as a principal place of your business, you can deduct the portion of your expenses dedicated to business operations for earning income. You can set this portion by determining the home space part that is used as an office space. The same portion should be applied to the related expenses such as a rent, mortgage, heating, lighting, repairs, and maintenance.
If you use an Internet for business purposes, you can deduct the portion of Internet usage dedicated to your business activity.
You can deduct a portion of your phone expenses as well as basic monthly phone charges related to your business.
All educational expenses related to your business are deductible. It includes courses, workshops, and seminars. You can also deduct travel and living expenses related to your business.
If you use an advertising to promote your business, you can deduct advertising fees.
You can deduct expenses related to make business cards.
If you have a business credit card or business loans, you can deduct interests that you paid. However, if you use your business credit card to make personal purchases, you should extract these personal purchases when claiming your interest deductions.
You can deduct the cost of materials and products that were used for the production of goods or providing services. You can also deduct the cost of stationery and other office supplies.
The best way to determine the correct proportion of your deductions and to verify your eligibility for certain deductions is to consult a certified accountant. The majority of accounting fees are deductible with the exception of some particular cases.
The legal fees are fully deductible in most cases. However, you can’t deduct legal fees related to acquiring a capital property. We recommend you to consult the lawyer even before you start a business, which will ensure your legal protection from the beginning. If you already started a business, the meeting with a lawyer can help you to resolve and to prevent many issues that you can face.
Stiverne law firm is specialized in business law and helps startup and small business owners with legal advice and contract creation.