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One of the downsides of running any business is needing to pay taxes. It seems that you have to pay for all kinds of different taxes. For example, you get taxed on your profits. You also get taxed for having benefits in kind. And so on!
If you run a business, you will know exactly what I’m talking about. And it seems that some enterprises end up paying lots of taxes each year. But, what if I told you that there are some often overlooked tax breaks you could use?
Intrigued? Let me share with you some of the best ones you need to consider. Don’t worry: you can thank me later!
Home office deductions
Are you a sole trader? If so, it’s likely that you work from home – at least, some of the time, anyway. When you do your tax preparation, are you logging your expenses for working from home?
I’m talking about things like lighting, heating, and insurance. In fact, if you read IRS Publication 587, it tells you more about it in detail.
The expenses you incurred before starting your business
It’s commonplace to spend money on your business before you start trading. To be honest, I’ve not met anyone that waited until they formed their business before they spent money on it!
The shocking truth is many new startups aren’t aware they can offset startup expenses. If you’ve just set up your business, tally up those costs. You can use them to lower your first business tax bill!
Small business expenses
You might think that things like bank fees and accounting fees aren’t worth noting. But, when you file your taxes each year, those costs could soon mount up. What’s more, they can significantly reduce your tax bill!
Anything that you spend in your business should get put on your tax bill. Even things like a cup of coffee with a client in a city center cafe. Of course, you should always keep a record of those expenses.
Health insurance premiums
A lot of self-employed people are guilty of not knowing about this fact. Sole traders can use their health insurance premiums to lower their tax bills!
Although they aren’t business expenses, they can lower personal tax bills. So, if you’ve got cover for you and your family, use the premiums to lower your personal taxes.
Carryovers
Sometimes you might not have been able to “carry over” some expenses in previous years. If you’re entitled to do so now, it’s important that you act fast. That way, you won’t forget about your entitlement. But, more importantly, you won’t have to pay so much tax. Examples of carryovers are things like charitable donations and capital losses.
Bad debts
Last, but not least, you should offset any bad debts against your business tax bill. Bad debts are usually things like loans you’ve made to employees. It’s worth talking to an accountant to determine if you’ve got any qualifying bad debts.
Now that you’re armed with the knowledge, it’s time to cut down on your tax bills. Who knows, you might even get a tax refund!
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