Still on shaky legs... You've been in business for two years with your small business. I'm sure you know that the majority of new businesses end up in the red for the first couple of years, which can make things very difficult for you. This is the time that the IRS waits for you to make a mistake, because like on the African plains, you're the weaker animal that the lions eat.
Treading Water... You're probably in debt to a few creditors, and filing those quarterly taxes can be a pain, as that money you're paying out to the IRS could be used for your business. File those quarterly taxes, regardless. An IRS-Hitman is looking for any excuse to seize your business at this early stage of its life.
Some relief... But as a former IRS-Hitman, I want to give you some advice on deductions that are available to you, and the pitfalls that can surround them:
If you operate your business out of your home and you can prove that part of your home is used as your primary place of business then you can write off part of your property tax. Even if you rent your home you can claim part of your rent as a deduction.
Interest on business loans can be claimed; again you must prove that the loan is applied to your business.
Travel expenses that pertain to business can be written off. If your vehicle is used for business, especially if you are a private contractor, you can write off gas and maintenance on the vehicle. Save all of your receipts.
Equipment and office supplies specific to your business are eligible. Be careful on this one; certain expenses are considered legitimate, and others aren't. A new truck to expand your business is acceptable. A new car for yourself does not, even if you claim it's good PR because it shows you're successful.
You can also write off insurance premiums related directly to your business.
Prove it! In short, business deductions must be proven as expenses that are directly required for your business. You must save every last scrap of a receipt in order to claim most of your expenses. The most important thing to remember is that you have to prove that your expenses are valid to the IRS.
Now you have the smoking gun...Use it!
Labels: Business Tax, Tax Deductions