So are you missing out on major tax deductions you’re entitled to. Small business owners, self-employed workers and independent workers can write off many legitimate business expenses immediately, reducing the amount of income on which they pay taxes. According to Mike Piper, a CPA who writes about investing at ObliviousInvestor.com the errors are basic and easy to avoid.
So let’s discuss couple of simple rules to maximize money while staying on IRS’s good side:
1. Avoid doing IT alone:
Yes we are all aware about the self made entrepreneurs and the pride they take in doing it, but taxes are one area where it is advisable to take considerable advice and professional help.
2. Pay Quarterly taxes:
It happens. Many first time business owners forget to pay estimated quarterly target the first time they have self employment income. But do take an accountant help to pay each quarter and don’t forget to factor any state, country taxes you may owe.
3. Prepare separate Business and Personal expenses:
Understandably, first time business owners are famous for doing this. And at end of the year the accountant has to sort it all through which jacks up the task of tax preparation. Keep separate credit accounts for business to avoid any future discrepancies.
4. Rise beyond classic IRA:
For years I have contributed to a personal IRA, with its limited contribution but then I found out individual 401(K). Annual contribution limits are much higher and you can make 401(K) contributions after-tax income.
5. Form the Right type of corporation:
A lot of entrepreneurs have benefitted forming an S Corporation or choosing S Corp taxation rules for their LLC. With an S Corp you can set up a regular payroll and make monthly payments to the IR subject to payroll taxes. You can save thousand dollars deciding how much you want to spend on yourself.
6. Stop thinking and do it:
I know like myself there are many more who do not like taxes but they have to pay. File your return anyway, then complete Form 9465 to set up a payment plan for the rest.
Till then file taxes and play safe for your business and don't forget to come back to the same place for more interesting blogging.