When running a business, it's important to remember that there are incentives. Case in point--you can offset your revenues with your expenses.
Here are some tips to deduct costs and make tax time a little sweeter for your business.
- Skill level:
- Moderately Easy
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Things you need
- Computer with Accounting Program or MS Excel
You're likely to have expenses from the start--so it's a good idea to get into the habit of monitoring your expenses. Track everything from equipment purchases to consulting services. You can also deduct marketing, furnishing and advertising expenses. If it relates to your business, deduct it.
Hire a Pro
It's well worth the money to have an accountant! They can help you discover "hidden deductions" and also get you set up with a smart, easy way to keep track of your business financials. When you use someone with the knowledge that an accountant has, it just makes sense to start off right and make sure you're complying with state and federal laws. And it's professional too.
Take an Upfront Deduction
Here's something good: You can write off up to $5,000 in business startup costs and another $5,000 in organizational spending during the year that your business starts. These are reduced if you have more than $50,000 of either type of expense.
Prioritize Your Startup Costs
If you are going to have to depreciate some business startup costs, you may want to delay purchases that can be put off until after your business opens. The same purchase made after opening could be written off in full in the first year instead of having it depreciate over 15 years.
Tips and warnings
- Use an accountant.
- Look into paying taxes quarterly.
- Be careful to save every receipt. These will help you add up your deductions more easily.