Home Business Tax Deductions You Should Take
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In any home business you definitely have more tax advantages than if you were self-employed. The tax advantages become substantial when you consider how you can improve the profitability of your business by declaring all of the home business tax deductions you are entitled to.
You may be
missing some very important deductions. You must itemize your deductions for your home business operation on a separate schedule just as you would for your personal deductions. Knowing which deductions you are entitled to can save your home business hundreds of dollars a year.
Here is some background information on how your income tax amount is arrived at by the IRS.
The U.S.
taxation code states that almost all income is subject to federal income tax The way that you, as the owner of your home business, arrive at the final amount of income tax is as follows:
Gross Income – (All Expenses + Miscellaneous Deductions + Depreciation on Assets) = Taxable Income.
Taxable Income X (Your Tax Rate) = Income tax for the fiscal year.
Here is a quick definition of the terms in the above taxation equation:
Gross Income = The total of all income for the year after the cost of the inventory has been paid for.
Expenses = All costs of doing business during the fiscal tax year. Examples include payroll, materials, supplies and interest on business loans, etc. To find out if at expense qualifies as a legitimate business expense, consult your accountant or the IRS.
Depreciation = This is the way of spreading out the deductibility of an asset over a period of more than one year.
The IRS has certain different depreciation schedules for different business property. This is done for assets like real estate, equipment and other assets with a long economic life. This method of taxation write-off has certain advantages. Be sure to talk to your accountant regarding proper depreciation rules. These rules are subject to change by the Congress and the IRS.
Miscellaneous Deductions:
This is an often misunderstood and overlooked way to save a lot of money on taxes. Remember that these types of expenses must be Totaled up and declared on a separate schedule of your income tax forms.
Always track your expenses and be sure to save at least one copy of every deduction. You will be asked for proof of every transaction that is declared as a deduction if you are audited by the IRS!
Here is a list of some of the things you can deduct from your income taxes:
Business related expenses include:
1 Air fares2nd Auto expenses3rd Books and Magazines4th Educational Expenses5th Home Office Space * + a portion of utilities, telephone, and maintenance costs6th Office Furniture7th Cleaning Expenses8th Meals with Business Clients9th Laundry Expenses (When Traveling)10th Advertising11th Impairment-Related Expenses12th Licenses and Regulatory Fees
* If you own your home you must use the IRS depreciation rules to mine this deterministic deduction. If you rent then you may deduct a portion of your rent
Check IRS Publication 535
to find out if you can deduct any or all of the above.
As you can see there are many deductions that are allowable for your home business. The best way to get more information on tax deductions and related information on income taxes is to go online to www.irs.gov. There you will find a helpful search engine containing thousands of government publications that you can research and print out if you need to.
Now you have a good idea of the deductions you are entitled to take. So do your research, keep track of your expenses and take all of the deductions you can for maximum profit every year.
This article was published at Bookkeeping Services of Charlotte, NC Related Business Taxes Articles
Benefit of Outsource payroll services
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Normally, business companies outsourcing their payroll function to decrease cost and improve working productivity. Businesses can focus on core business activities with more time on hand.
Dealing with payroll activities can be a complicated job for the experienced business owners. Keeping tack of payroll regulations and changes in withholding tables and calculating amounts can be a time consuming and tedious job.
Sometimes, it will easily lead to mistakes, if you are working with the core business activities and doing the payroll simultaneously.
This article was published at Bookkeeping Services of Charlotte, NC
Payroll Services for Retirement Planning
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As a new business owner, naturally you’ll want to make the most informed, cost-effective decisions. One of the most crucial decisions is how to process payroll and tax information.
You’ll have to factor in local and federal tax regulations, retirement planning and quarterly financial reporting. These responsibilities can seem overwhelming without the right assistance.
Here you’ll find several different options to make payroll a breeze: accountants, payroll software or payroll services.
New businesses are advised to “Hire an accountant,” which is very sound advice if you’re looking for peace of mind A salaried accountant could provide tremendous payroll services but could set you back then, 000 -, 000 annually, which isn ‘ t feasible for smaller companies.
Sometimes your best bet is to hire a consultant for 0-200/month to cover book keeping. Ask around to find a staff accountant who is reliable. The last thing you want is late tax returns or penalties due to an accounting error.
You can hire a company like H & R Block to cover your tax filings, but they will not be able to provide you with retirement planning services.
To save time, medium to large sized companies choose to outsource payroll services and retirement planning to a company. ADP and Paychex 401k plans and services are ranked among the best in the nation.
There’s always a danger in using one of these service providers with over 543 000 clients, that you may be the one to slip between the cracks. Some clients report poor customer service, false promises, late deposits and hefty penalties.
Yet in general, you can sleep sounder by not having to spend all of your time micro-managing payroll and taxes.
QuickBooks Assisted Payroll costs half the amount of payroll services, around / month on average. Instead of waiting by the phone or fax machine, you can enter data into your computer and immediately have information updated in real time.
You may choose to print your own paychecks or deposit funds directly into employee bank accounts. Similar to outsourcing, QuickBooks will cover state and federal tax filings as well, taking a huge load off your shoulders. With just the click of a mouse button, you can have W2′s printed right in the office.
With QuickBooks or other payroll software, you will have maximum control over your financial pay-outs so you can feel comfortable knowing all your employees and tax agencies will be satisfied.
To help with your retirement planning needs, QuickBooks Retirement Solutions is easy-to-navigate software with clear-cut employee retirement plan options.
The importance of payroll services should not be taken lightly. Whether you’re assessing your business retirement plan options, filing your taxes or simply paying your workers, payroll services are a vital part of every business.
A good accountant can keep you out of lawsuits and jail, keep your employees happy and give you the peace of mind you need to run a successful business.
This article was published at Bookkeeping Services of Charlotte, NC
