Have you put off filing your taxes because you're confused and frustrated by changing laws and new rules? This year it seems tougher than ever for small-business owners to decode what the IRS is looking for, let alone maximize their deductions.
In a recent survey by Xero, nearly one in four accountants says that government regulations and changes in tax policy are impacting small businesses the most this year. So what’s a small business to do? Accountants from the survey offer some advice and tips on maximizing your deduction:
Buy Now, or Pay Later. Small businesses can deduct the full purchase price of qualifying equipment and software, up to $500,000, thanks to Section 179 of Small Business Expensing. But beware—this is a 2013 tax extension, and could potentially disappear in the future, so consider upgrading your systems this year.
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Straighten Up the Home Office. Beginning in 2013, there’s a simplified form that will cap home office deductions at $1,500. The form is a great option for those who don’t want to deal with the hassles or complexity of calculating home office expenses, depreciation and carryovers of unused deductions. But if your home office expenses exceed $1,500, you can still use the traditional forms to claim your full deduction.
Harness Those Receipts. Scrap the envelopes full of paper receipts and create an accurate system that lets you store receipts electronically. Cloud solutions are great—and affordable. They allow businesses to click photos of receipts with a smartphone or tablet, and therefore never lose track of a crumpled, but important, piece of paper.
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Don’t Make an “OOPs.” Out-of-pocket expenses—or OOPs—are the most overlooked deductions, followed by auto expenses. Make sure you get what you’re due—track those miles, save dinner receipts and write off that latest and greatest smartphone.
Develop a Long-Term Relationship. While most small businesses may only call their accountants in January or February, panicked about setting up that annual tax appointment, it’s the wrong approach for maximizing deductions and creating a strong financial plan. You should make time for your accountant all year long. The key to that is finding an accountant who offers a fixed fee and a value price that includes tax and accounting services. Proper financial counseling will bring peace of mind and put more money in your pocket.
Jody L. Padar is the CEO of New Vision CPA Group and a Xero certified accountant. She adopts advanced technologies and best practices that support Web-based client services and is also a GREEN expert, staying apprised of green-related government incentives and tax credits to ensure clients receive the proper deductions.
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