It’s that time again...tax time! Maybe you filed on time or maybe you asked for an extension. Here are some last minute tax tips that you should know.
Talk to a Tax Expert
You may be an expert in your industry, but that doesn’t necessarily make you a tax expert. Make sure that you get guidance from a tax expert. You may think it’s expensive, but when it comes to dealing with the IRS, having your taxes done the right way is much less expensive. Audits can and do happen. A tax expert can help you ensure that your taxes are properly done.
Know the difference between a seasonal tax preparer and an actual tax expert. A good business accountant or CPA is worth the investment. They are less likely to miss deductions or make mistakes. Professional tax experts also have insurance in case they do make a mistake. They have years of training. A seasonal tax preparer probably received just around two months of training.
Buy Needed Supplies Before the End of Each Tax Year
If you know in November or December that you’re going to need certain supplies for your business, buy them before December 31. You can claim those supplies on your return. This is a good way to help lower your tax burden.
Capital Losses
No one likes to lose money. The goal of being in business is to make money. The good news is that you can talk to your tax professional about how you can make the most of capital losses. These losses can be used to offset your taxable income. However, there are limitations.
Maximize Retirement Contributions
Although tax laws can change every year, you can maximize your retirement contributions each year to save on taxes. This is true even if you wait until the last minute. For 2015, people who contribute to an IRA could contribute the full yearly amount. If you have a Keogh, note that you need to establish it before December of the current tax year in order to get the tax benefit.
Understand Your Legal Entity
Each type of legal business entity (such as an LLC or an LP) have specific tax guidelines. It’s important that you talk with a business law or tax expert before you incorporate your business. This is the best way to know how your business will be taxed and how you will have to file your taxes. For instance, although an LLC does not really give you a tax benefit per se, it does make doing your taxes easier than some of the other legal entities. You can still complete a 1040 and just include the additional schedules for your business.
Plan for the Following Tax Year
Owing money to the IRS can make anyone feel nervous. The good news is that you can minimize what you may owe (or save up to make a lump payment) simply by planning ahead. Set up a separate account for taxes. When you receive a payment for your services, take 25% of what you get and put it into that account. Do not touch that account for any reason. That money is to be used only to pay your tax bill.
Clients ARM is not a tax expert. We’ve posted this article strictly for educational purposes. Please consult with your tax professional to determine how or if any of the above information can benefit your business. Don’t forget to sign up for our newsletter!
