The American Institute of CPAs says that there are 10 words you have to keep in mind in order to be sure you pay no more taxes than you’re legally required to pay.
- Expenses: Keep a daily diary or log of your expenses throughout the year.
- Deductions: One of the principal reasons small business owners pay more taxes than necessary is that they don’t take advantage of all of the deductions they’re legally allowed.
- Traps: A small business owner may do some things that are more likely to get IRS attention than others.
- Retirement: You must have earned income each tax year to qualify for a tax-deductible retirement plan.
- Equipment: For tax years beginning in 2011, a small business may deduct up to $500,000 in equipment purchases as long as the business spends $2 million or less for equipment for the year.
- Payroll: One of the most common and costly tax-related problems for small business owners is that they use the payroll taxes withheld from employees to finance business operations.
- Insurance: If you have health insurance coverage for your employees, check to see if you are eligible for the small business health care tax credit.
- Veterans: An expanded tax credit is available to business owners who hire certain unemployed veterans.
- Contributions: Be sure to get a valuation for any non-cash items your business donates to charity so you’ll have the records you need to support the deduction for your contributions.
- Help: If you are unsure about anything related to your tax obligations under the law, you should seek professional help from a certified public accountant.
Via Ashok Ramachandran