Managing Your Business

 

04 12 2017

Small business tax deductions

04 12 2017

3 Small Business Tax Deductions You Need To Know

With the tax filing deadline fast approaching, some small business owners are working through their financials and combing through the tax code. No matter the type of business you operate, a few tax tips can mean a lower financial liability and a return that’s more strongly in your favor. Here are some last-minute suggestions to help you get the most out of filing:

Deducting your home office

While you spend plenty of time at your place of business, you may do a lot of work at home, too. If you have an area of your home set aside for making phone calls, balancing the books, ordering products and other activities, you can write it off on your taxes.

The QuickBooks Resource Center said there are two important points to consider when determining eligibility for the home office deduction:

  • The space must be used exclusively for business activities. That means you can’t count the part of the room you use for household storage, or the complete square footage of a large room if you only use a corner of it for your office.
  • The total deduction can’t have a higher monetary value than the gross income derived from the use of your home for business, after expenses are taken into consideration.

Additionally, there are two ways to calculate the this deduction:

  • The simplified method, which allows you to count each square foot used, up to 300 total, at $5 per foot.
  • The standard method, which is significantly more complicated, but removes the square-footage limit and allows you to account for expenses like mortgage, rent, utility bills and insurance.

This deduction isn’t for everyone, but it definitely pays off when you meet the criteria.

Some wages and contractor payments are deductible

Small Business Trends highlighted this distinction, noting that companies organized as sole proprietorships, partnerships and LLCs can’t count wages paid to owners or partners as deductions. However, they can deduct payments made to employees. Similarly, payments made to independent contractors are deductible – just make sure your organization has issued the correct documentation, form 1099-MISC, to any such contractors.

Planning ahead

With the tax deadline fast approaching, it’s impossible to do any advanced planning for this quarter. However, you can start organizing and looking into the next quarter soon after you file for this one. Business.com said quarterly estimated tax payments are a common burden among nearly all small business owners. While this financial responsibility will continue to be significant going forward, advanced preparation can make it more predictable and easier to manage.

Business.com suggested making and sticking to a schedule for transferring the funds needed for quarterly estimated payments into the appropriate account. Owners can also set up an account with the Electronic Federal Tax Payment System to automatically withdraw the money for quarterly estimated payments.

Planning ahead also means taking future financial concerns into account. If you want to expand or change your business in the coming months, consider alternative business loans as a source of funding.

Find Out How Much Funding You Qualify For

Fields marked with an * are required
By clicking this button I agree to all terms and conditions.

Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.