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If you’re like most small business owners, paying taxes is probably not your favorite topic. Unfortunately, tax season comes around whether you’re prepared for it or not.
That’s why tax planning is so important. The tax code is always changing, and it can be confusing to keep up with.
Before you search for tax planning near me, you should know there are a number of tax planning myths when it comes to small businesses. Understanding what is tax planning and knowing some helpful tax planning tips can help you avoid paying more than you should.
Our tax planning guide offers 4 tax planning myths to consider for your business.
1. Startup Costs Aren’t Always Tax Deductible
The expenses you incur to get your business off the ground are your startup costs. These expenses vary depending on the size and type of the business.
Startup costs may include training, travel, advertising, equipment, furnishings, and more. Some business costs are immediately deductible while others depreciate over time.
There’s a limit to what can be deducted right away. It’s a good idea to discuss your startup costs with a tax advisor.
2. Overpaying Taxes Makes You Audit Proof
It’s never a good time to overpay the IRS. Only pay what you owe.
The IRS isn’t concerned about whether you overpay your taxes. However, they do care if you pay less than you owe.
They care if you have proof of your deductions as well. The only way to “audit proof” your business is to document all of your expenses, pay what you owe, and seek good advice from a tax professional.
3. A Home Office Deduction Is a Red Flag
The home office deduction was once suspicious to the IRS. But those days are over.
With so many remote workers and home-based businesses, there’s a simplified home office deduction you can take. With so many people taking this deduction, the IRS cannot audit all small business owners and remote employees.
If you work from home and have a designated workspace, take the deduction.
4. Incorporated Means More Deductions
Becoming incorporated isn’t necessary for every small business owner. Self-employed individuals qualify for some of the same deductions as incorporated businesses.
Incorporation can be expensive. This is a burden many small business owners simply don’t need.
It’s not uncommon for a startup to spend thousands in accounting and legal fees to later find out they have to change their name or change their business plan.
The last thing you want is to incorporate and not make money for the first couple of years. This could leave you saddled with no income and minimum corporate tax payments to contend with.
Tax Planning Near Me
Tax bills keep coming, like it or not. Tax laws can be difficult to navigate. What’s true today may be completely different tomorrow.
You need expert advice to help you stay on top of your business taxes and make the right decisions for you, your business, and your employees.
If you’re searching for tax planning near me, we’re here to help. At Sterling Tax and Accounting, your business is at the heart of what we do.
Our tax planning experts can help you track your business performance, provide monthly accounting services, and reduce your tax liability. Contact us today to learn more.
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