Monthly Challenge Series: Get the Best Tax Return For Your Small Business
When you own a small business, every dollar counts — especially at tax time. Are you getting the most from your return? It’s time to take a deep dive and see where you can really streamline your taxes and receive the best refund for your business. Use these key practices to help ensure you get the most you can from Uncle Sam.
Keep Every Single Receipt
Saving every receipt may seem excessive, but it’s better to be thorough than to wish you had held onto it. Make sure you go through your office, your car, your purse — wherever you may stash your receipts. Those purchases can really add up over the course of a few months and make a big difference when it comes to tax deductions.
Take Advantage of the Health Credit
If you helped pay premiums for employee health insurance, there are tax breaks you should take advantage of. The amount of credit you’ll receive varies based on how many full-time employees you have and the average cost of their wages. In order to find out how much credit you’re eligible for, use form 8941. Furthermore, if your business doesn’t owe taxes in that year, you can roll that credit forward. Do you have a remainder of the tax premium? If so, you can claim business expenses against it!
Deductions for Property Expenses
Some of your property may be deducted as expenses. If you opt to deduct the complete amount of those purchases (up to $500,000 as of 2016), look into section 179 for business provisions. Below are a few examples of what qualifies for the deductions:
- Facilities used for business
- Computer software
- Housing for livestock or horticultural products
- Property utilized for manufacturing, production and/or transportation
- Buildings used for research
This tax credit doesn’t cover all property-based expenses. Here are a few examples of what section 179 does not cover:
- Property outside of the U.S.
- Facilities meant for lodging
- Investment properties
Home Office Deductions
Depending on what kind of business you run and how much work you do out of your home office, you may be eligible for several deductions, especially if your home office is your primary business office. There are several roadblocks to help keep these available deductions honest, so make sure you consult all the guidelines before you file. Key home office deductions include, but aren’t limited to direct expenses, indirect expenses, interest and property taxes and rent.
While any contribution to charity is a positive one, there are types of contributions that could benefit that charity and your business. Maximize your charitable contributions by donating appreciable stocks instead of money. Instead of deducting the price you paid for the stock, you are able to deduct its current value. For example, if you purchased stock at $25 per share, but now it is worth $50 per share, you are able to deduct $50 when you file.
Every small business is unique, as are the deductions they qualify for. If you’re unsure, consult with a tax professional to ensure you are getting the most out of your return.