Planning for anything is great and for a stressful topic such as tax, it can be highly effective and save the hard-earned money. With tax season approaching, finding methods to lessen the taxable liability can be of great relief. If you are a business owner, several deductions can help you to save and here are some of them you will be intrigued to know:
EMPLOYEE BENEFITS AND YOUR HEALTH INSURANCE
Did you know that benefits falling under qualified benefits you pay to your employees can be deducted? For instance, you can subtract the expenses of qualified health plans, cafeteria plans, educational assistance, group-term life insurance, dependent care assistance, adoption assistance for your employees.
You can also purchase your health insurance, and you might be able to lessen the premiums as an adjustment. To qualify for this, you must not have had these benefits from other sources. Keep in mind this subtraction should not be more than the net income of the business.
If you use your car or other vehicles for business purposes, the expenses incurred can be reduced. They include the costs of traveling for office supply or for attending meetings outside your office, so keep track of it for every time.
There are two ways to calculate these expenses, either you can choose from the standard mileage for which you can ask your business tax advisor or subtract the actual costs for driving the business vehicle. In case if you choose the second option, record the money paid for oil, service, insurance, and interest on the loan.
HOME OFFICE DEDUCTION
If you have kept an area of your home, particularly for your home office or simply for the business purpose, you can deduct this. However, you will have to meet some specific rules. For instance, you need to devote that section only for your business and nothing else.
While claiming this deduction, you can deduct direct and indirect expenses, costs such as repairing of your office fall under direct expenses. Whereas, the percentage of the amount paid for electricity and rent fall under indirect expenses.
PHONE AND INTERNET SERVICES
If you have different phones for your personal and business purposes, irrespective of whether they are mobile phones or landlines, you can deduct for the one you use for the business purpose. In case if you have a landline for both personal and business use, you might not be allowed to deduct its expenses. However, you can subtract any long distance charges associated with your firm.
For the cases of second-line or mobile phone for both personal and business calls, you can deduct a percentage of expenses for phone services. For instance, if 75 percent of calls are done for the business purpose they can be reduced. Other than this, you can also deduct the costs of internet service or the ones to keep the computer running.
Apart from them, you can also deduct the bad debts your business has for the year, depreciation on your assets, and half of the self-employment expenses. However, for more professional advice related to your tax planning, you can approach a business tax advisor. The tax season is stressful, but the right planning can make things easy for you.