Hate to be the bearer of stressful news, but tax season is just around the corner.
Instead of waiting until the last minute to file, spare yourself the anxiety and stress by getting your business’s paperwork prepared earlier than usual. We’ve prepared a list of a few things to look out for this tax season.
5 Things to Prepare Before Tax Season
Know Your Carbon Footprint
If you purchased an energy-saving system in 2015, you could qualify for energy investment tax credits. You could save 30 percent of the cost of solar or wind technologies installed or 10 percent of geothermal projects.
Own an office space? If you reduced energy and power costs by 16⅔ percent, you can deduct $0.60 per square foot of building floor area. If you reduce energy by at least 50 percent, you can deduct as much as $1.80 per square foot.
Make sure to snag all your deductions. Working out of your home? That’s a deduction. Office supplies? Deduction. Office furniture? Deduction. Software and subscriptions? Deduction and another deduction. While you do need to have records of your expenditures, make sure you take back the money you’re entitled to.
Mileage and Travel
These deductions are slightly more complicated than the rest. Documentation is key, so make sure you have records of your mileage, tolls, parking costs, and the reason for your trips. If you lease your car, make sure to include payments. If you’re buying the vehicle, be sure to include loan interest and depreciation.
Do you work from your home? You’re able to deduct business-related mileage from the time you leave your home to the time you return. Are you a business traveler? Hotel costs are 100 percent tax-deductible, as is dry cleaning, rental cars, and tips on the road. Eating out is only 50 percent deductible as are client entertainment expenses. Gifts, however, are 100 percent deductible up to $25 per person. These items can add up, so be sure to look back and account for all of the trips you took last year.
People who don’t pay you probably aren’t on the aforementioned gift list, but they can provide you with some tax relief. When a client skips out on the bill, in some instances that cost can be deductible. Does your business sell goods? You can deduct the cost of the products you sold but weren’t compensated for. However, if you provide intangible services, like consulting, you can’t deduct time spent on a client who didn’t pay.
Hopefully you were able to give back in 2016. If your business is a partnership, a limited liability company, or an S corporation, your business can make a charitable contribution and pass the deduction through to you to claim on your individual tax return. If you own a regular C corporation, the corporation can deduct the charitable contributions.
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