Business Viewpoint: Small business tax filing tips
BY YOLANDA GARCIA OLIVAREZ Business Viewspoint
Thursday, February 07, 2013
2/07/13 at 4:02 AM
Spring begins next month, but another season also is on the way: Tax season.
If you are a small business owner, you need to understand how taxes are going to affect you and your enterprise. It's important that you file properly, avoid audits and claim the right tax deductions.
Entrepreneurs in the South Central Region of the Small Business Administration can find help and guidance from SBA resource partners located throughout Arkansas, Louisiana, New Mexico, Oklahoma and Texas.
Here are a few tips that may ease the burden of tax preparation and to help you get ready for the April 15 deadline.
1. Keep good records.
Proper record-keeping year-round is the first step to ensuring your taxes are filed accurately and that you have the paperwork you need to back up your deduction claims should you be audited.
2. Understand your deductions.
What small business deductions can you take? Do you have the documentation and original receipts to back them up? Tax credits and deductions change each year.
3. Utilize the Small Business Jobs Act Tax provisions.
The Small Business Jobs Act of 2010 signed into law by President Barack Obama has more than 17 tax provisions decreasing the tax burdens for small businesses, and several of these provisions can be taken advantage of during this year's tax season. Utilizing these provisions will provide great savings for your business.
4. Remember the tax credits within the Affordable Care Act.
These tax credits will allow small businesses to cover up to 35 percent of the premiums a small business pays to cover its workers. In 2014, the rate will increase to 50 percent.
5. Avoid common audit traps. It is very important to be aware of red flags and act on them before the IRS does: Here are three common traps:
Classifying employees as independent contractors: Independent contractors and employees are not the same, and it's important to understand the difference. In the eyes of the IRS, misclassification can be seen as an attempt to avoid payroll taxes, and non-compliance can bring penalties and back taxes.
Home office deduction: This deduction is very specific, and not all home-based businesses will qualify. Likewise, if you run your business from a commercial location and claim the home office deduction, you might trigger some interest from the IRS. Know how to determine if you are eligible to claim it, and what specific expenses you can write off.
Large sum miscellaneous deductions: If you claim a large amount of itemized deductions relative to your income, the IRS will get suspicious. Likewise, if you bucket a large amount of miscellaneous expenses, you may raise eyebrows. Be specific and label every deduction.
6. Keep business and personal expenses separate.
The IRS scrutinizes personal expenses that may have been claimed as a business expense, such as the use of a business vehicle for personal use. Be diligent about keeping good records. Maintain a separate bank and credit card account for your business.
For additional information on these tax tips and current year tax deductions, see the SBA Small Business Tax Guide or contact the IRS at tulsaworld.com/irs For information and assistance from local SBA resource partners, visit tulsaworld.com/sba We also invite you to follow us on Twitter @SBAsouthcentral and like us on Facebook at tulsaworld.com/sbasc
Yolanda Garcia Olivarez is regional administrator for the SBA South Central Region.
Original Print Headline: Six tax filing tips for small businesses
The views expressed here are those of the author and not necessarily the Tulsa World. To inquire about writing a Business Viewpoint column, email a short outline of the article to Business Editor John Stancavage at john.stancavage@tulsaworld.com. The column should focus on a business trend; the outlook for the city, state or an industry; or a topic of interest in an area of the writer's expertise. Articles should not promote a business or be overly political in nature.
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