Inside Every American Is An Entrepreneur Trying To Get Out
Tuesday October 21st 2014

5 Tax Tips that Will Save You Big Money

Katie Morell, OpenForum.com

Are you worried about tax season?

Fear not. There are tons of ways for small business owners to ease the pain — ranging from new credits to oldie-but-goodie deductions.

Here are five tips for saving money (and lots of it) come April 15:

Tally up health care costs

Last year, the Obama administration ushered in a slew of policies as part of the new health care reform — one of the biggies being the Small Employers Health Care Tax Creditapplicable for tax years 2010 through 2013.

“This credit is for businesses with less than 25 employees,” says Richard A. Lindsey, CPA and owner of Zevac & Lindsey based in Mobile, Alabama. “The credit equals 35 percent of health care premiums paid by the company, which is a pretty big deal.”

“It would be very easy to spend $5,000 to $6,000 per employee, so if you have a 35 percent credit off of $5,000, that is a $1,750 credit per employee that you will receive. The credit reduces your taxes dollar for dollar,” Lindsey added.

Think: Who did you hire last year?

As part of the Hiring Incentives to Restore Employment (HIRE) Act, passed last March, employers who hired previously unemployed workers are eligible for the HIRE retention credit.

“If you keep a formerly unemployed worker on your payroll for a year, you can apply for a credit of 6.2 percent of their wages, up to $1,000,” Lindsey says.

Document recently acquired assets

If you bought a work related asset between Sept. 8, 2010 and Jan. 1, 2011, you are in luck. Thanks to the Small Business Job Act,you can write out 100 percent of your investment.

“This is about bonus depreciation… you get to write off asset costs up front rather than over a number of years,” says Barbara Weltman, New York-based small business consultant and author of J.K. Lasser’s Small Business Taxes 2011: Your Complete Guide to a Better Bottom Line.

Depreciation write offs differ state to state, says Weltman. “Some don’t allow certain write off’s, so it is always good to check your state.”

Click here for specifics on this year’s depreciation guidelines.

In addition, The Section 179 Deduction for 2011 allows business owners to deduct up to $500,000. Previously, the limit was $250,000.

“This applies to the first year you bought the equipment,” Weltman says. “It applies to new or pre-owned equipment.”

Remember simple deductions

For small business owners, every day purchases can often get lost in the shuffle. Instead of sifting through a mountain of receipts in early April, try to identify business purchases early.

This includes office supplies — even the $10 binder you picked up on your family grocery store run. Make sure to itemize; things can add up quickly.

“A lot of small business owners pay for things out of their own pocket,” says Lindsey. “Make sure to keep good records between your business and personal life.”

Additional overlooked deductions include insurance of any kind, rent, utilities, travel and payroll costs.

Click here for more information on small business tax credits, and here for information on recent tax changes.

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