Tax Deductions for Business Owners
More than Money with Gene Dickison Answers:
“My wife started a business this past March. She was employed by a large company for many years and is now ‘on her own’. We are both worried about filing income taxes now that she is self-employed. We want to take advantage of all the rules to reduce our income taxes, but we would prefer not going to jail if we make a mistake. Any advice?”
It depends . . . are you going to be ‘do-it-yourselfers’ or will you have a professional tax accountant (EA or CPA) assist you?
Your tax life has changed dramatically. Preparing income tax returns as employees is quite straight-forward with very few moving parts. Tax returns for business owners can also be simple – if you simply don’t know what you’re doing.
A professional tax accountant (Enrolled Agent or CPA) has spent countless hours studying the options available to you as a business owner. He/she can probably save you many hours or work, many mistakes, and (likely) many dollars.
You should meet with your professional tax accountant as soon as you are able during their ‘off season’ to get trained up in the records you need to keep and the documents (‘paper trail’) to compile to keep your IRS bill as low as legally possible.
At the least in the beginning, a good guideline is to document everything you do and get a paper receipt for everything you spend. You may not need it all, but whatever you do need – you’ll have it.
What are the ‘usual and customary’ expenses you incur in your business that are tax deductible on your Schedule C?