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Tax Deduction: Top 7 Small Business Tax Tips

By J. Stephen Pope

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Here are seven ways for owners of small businesses to save money on their taxes.

  1. Incorporate Yourself: If you're still a proprietor
    or partner of a business, it's time to incorporate yourself.
    Not only will you limit your liability, but you may enjoy
    lower tax rates on small business income and other tax
    advantages as well.

  2. Be Home Based: If possible, continue (or switch to)
    being a home based business. Not only will you keep your
    overhead down, but you will be able to write-off (or deduct)
    the business use of your home.

  3. Income Split: Pay reasonable wages to your spouse and
    children. In this way, you can legally divert income taxed
    at your higher rate to your family members that are in a
    lower tax bracket.

  4. Rearrange Your Affairs For Maximum Tax Savings: Can you
    make some changes to turn your hobby into a moneymaking
    business? Can you use that extra room in your house as a
    home office for your business? Can you arrange to use your
    car more for business purposes? Can you arrange for more of
    your entertainment expenses to be business related?

  5. Document Your Expenses Well: Do you document your
    expenses well so that they would survive a tax audit?
    Have you kept a mileage log so that you can prove the
    percentage business use you claim for your vehicle?
    Have you kept receipts for all your entertainment expenses
    and listed the business purpose on the back of each receipt?

  6. Be Punctual: File all returns and pay all taxes due
    (income, payroll, sales, et cetera) on time. This
    way, you avoid expensive late filing (and payment)
    penalties and interest.

  7. Develop a Tax Planning Mindset: Some people only worry
    about their taxes during tax season. However, you will save
    a fortune in taxes, legally, if you make tax planning your
    year-round concern. Do you make business and personal
    purchases, investments, and other expenditures with tax
    savings in mind?

J. Stephen Pope, President of Pope Consulting Inc.,
http://www.popeconsultinginc.com/ has been helping
clients to earn maximum business profits for over
twenty-five years.

For valuable Work at Home Small Business Ideas,
visit: http://www.yenommarketinginc.com/

Source: http://Top7Business.com/?expert=J._Stephen_Pope

Article Submitted On: November 16, 2004