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- iHaveNet.com: Small Business Guide
Small Business Money Matters
Small business owners face unique tax issues.
Here are some ideas to help you get the most from your business deductions, avoid problems that can affect small business owners, and plan for the future.
Keep good books and records for your business
Keep these records separate from records of your personal expenses.
Keep your business records as long as necessary. Generally, this is three years after the date you filed your income tax return. However, in some cases, it's a good idea to keep records even longer. Keep detailed depreciation records for as long as you own business property. You'll need them not only to figure your current-year depreciation deduction but also to figure your basis when you sell or otherwise dispose of the property.
If you need to hire employees for your business, consider employing family members
This will allow you to shift income to members in lower tax brackets as long as they provide bona fide services to the business. (Depending on earnings, there may be no tax at all on wages paid to the child.)
You also avoid the employer share of FICA on wages to your child under age 18. And you can set up a fully deductible health insurance plan if your spouse is your employee (since the plan will cover employees and their spouses -- that's you).
If you need to hire employees for your business and don't have any suitable family members, consider hiring workers who will give you a special tax benefit
Hiring certain workers entitles you to claim a tax credit (work opportunity credit, empowerment zone credit, or Indian employment credit).
Before advertising for help, check with your state employment agency on whether it can assist you in getting workers who will entitle you to a tax credit.
Use the standard mileage rate to deduct your car expenses as a way of simplifying your record keeping if you are eligible to use this rate
But if you have all receipts to show your car expenses, figure your deduction using the standard mileage rate and the actual expense method; then choose the method that gives you the greater deduction. In either case, be sure to keep track of the dates, mileage, and purpose of your automobile use.
Keep records to substantiate your travel and entertainment expenses
While you don't have to keep receipts for expenses (other than lodging) of $75 or less, you must still note in a log or diary the business purpose for the expense, the date it was incurred, and the amount you spent.
Plan equipment purchases carefully to get the most from your depreciation deductions
Because of conventions, the timing of your purchase can affect the amount of depreciation you can deduct. Or you may be able to expense some of the cost of equipment as long as you begin to use it by the last day of the year.
Use retirement plans not only to save for your retirement needs but also to reduce current taxes
If you have not yet set up a retirement plan, consider a Keogh, SEP or SIMPLE plan to put more away on a tax-deductible basis than you can under an IRA. But if the tax year has closed and you haven't set up a Keogh, then look to the other plans, which allow you to set them up and make contributions until the due date of your return (including extensions) that will be deductible for the previous year.
If you have a sideline business that shows a loss, make sure you run it in a businesslike way, in order to prove your profit motive (so your loss will be deductible)
Keep separate books and records, and business bank accounts, and change business operations with an eye toward making a profit.
File your income tax return on time or obtain a filing extension
If you don't, you risk interest and penalties for late filing. You also lose the opportunity to make certain tax elections required to be made on a timely filed return.
If your business suffered a loss, get the most benefit from a net operating loss
Carry back the loss to generate an immediate tax refund. Or, if you anticipate greater profits in the future that will put you into a higher tax bracket, consider waiving the net operating loss carryback and carrying your loss forward to the next year. Be sure to keep track of NOLs from each year separately because of different carryforward periods.
Small Business Guide
- Starting Up Your Business
- Coming Up With a Winning Business Idea
- Common Startup Mistakes
- The New Rules for Startups
- Business Incubator FAQs
- Naming Your Business
- Researching Your Business
- Your Personal Savings
- Registration, Licenses, and Permits
- Getting a Tax ID Number
- Fast-Growth Startup Resources
- Structuring Your Business
- Overview: Corporations
- State Offices of Incorporation
- Incorporate Out of State?
- Writing a Partnership Agreement
- Choosing a Board of Directors
- Basics of a C Corporation
- Basics of an S Corporation
- Basics of an LLC
- Basics of a Sole Proprietorship
- Basics of a Non-Profit Corporation
- Basics of a Professional Corporation
- Basics of a General Partnership
- Basics of a Limited Partnership
- Your Company's Public Relations
- Elements of a Successful Public Relations Campaign
- How to Use Your Press Coverage Effectively
- Press Releases
- How to Write a Successful Press Release
- Sample Product/Service Press Release
- Sample Commentary Press Release
- Sample Event Press Release
- Sample Tips Press Release
- Sample Personnel Press Release
- Effective Competitive Analysis
- Managing Purchasing to Maximize Cash Flow
- Top Six Pricing Mistakes Businesses Make
- How to Avoid Lowering Your Prices
- Bidding Basics
- Hiring Staff
- Creating an Effective Job Description
- Do You Know How to Pick Them?
- Little-Known Hiring Resources
- Classifying Contract Workers
- Tips for Successful Interviewing
- What You Can't Ask in a Job Interview
- New Hire Paperwork
- Small Business Insurance
- Types of Insurance for Small Businesses
- Small Business Insurance FAQs
- Insurance Resources for Small Businesses
- Home Office Insurance: Myths & Realities
- Small Business Resources
- Government Resources for Small Business on the Web
- Resources for Women Entrepreneurs
- Fast-Growth Startup Resources
- Small Business Security Resources
- Taking Time Off
- Your Pre-Vacation Checklist
- How to Take a Vacation
- Learning to Delegate
- Getting Away When You Can't Get Away
- Preparing for Tax Season
- Year-End Planning Tax Savers
- 10 Ways to Pay Less in Tax
- 25 Common Business Deductions and Expenses
- Avoid These Common Errors and Audit Triggers
- Understanding the Home Office Deduction
- Corporate Income Taxes Primer
- Employment Taxes Primer
- Sales Tax Primer
- Sole Proprietorships and Partnerships Tax Primer
- How to Get a Filing Extension
- Year-End Reconciliation
- Getting the Most from Your Accountant
- Developing Accurate Financial Projections
- Cash Flow
- 10 Ways to Help Increase Your Cash Flow
- Cash vs Accrual Accounting
- Bookkeeping and Record Keeping Basics
- Quick Ways to Get Through a Cash Crunch
- Projecting Cash Flow
- Cash Flow Triage
- Getting Funding
- Cash Flow Through Factoring
- Small Business Investment Corporations (SBIC)
- Traditional Funding Sources
- Non-Traditional Funding Sources
- Your Company's Credit
- How to Read a Business Credit Report
- Credit Terms Glossary for Your Small Business
- How to Protect and Improve Your Business Credit Rating
- Give Your Business the Financing Edge
- Employee Compensation
- Employee Benefits
- Bonuses: How To Be Fair
- Workers' Compensation Q&A
- Keeping Workers' Compensation Costs Down
- Payroll Management Choices
- Key Elements of Payroll
- Working with a Payroll Service Provider
- How to Create a Business Plan
Small Business Money Matters - 10 Ways to Pay Less in Tax
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