Managing taxes is generally not a piece of cake. There are a number of things that you need to carefully account for while filing your taxes.
Here are some tips on how small business owners can make the most of filing their business tax returns online and reduce their tax burden a bit:
1. File for Home Office Deduction
Most businesses across the globe were confined to working from home for a major part of the last year. If you, too, were among them, there’s some good news for you. You can be eligible for getting a home office deduction on your taxes as a business owner.
Besides this, you can also file a tax return on the entire operating cost of your vehicle. This, however, is only applicable if your vehicle is solely used for business. If you use it for both business and personal travel, you can get a deduction for the business usage costs.
2. Returns on Business Travel
For most businesses, travel expenses were down by a lot in 2020 because of obvious reasons. However, this business travel is a substantial deduction when you do engage in it. The most important thing to get a return on this is to properly document the purpose of your trip.
For your trip to be classified as a business trip, it must be necessary for your work and to be away from the city you are taxed in. Generally, deductible travel expenses comprise – the cost of travel to and from the destination, parking fees, toll fees, lodging, and several other things.
3. Expenditure on Employees and Licenses
Salaries and benefits offered to employees are a major part of the expenditure. Lucky for you, they are generally tax-deductible. You can file for tax returns on the salaries, benefits, and even vacation time offered to your employees. Remember to keep an accurate account of every expenditure on these things and you will be able to file a substantial tax return on them.
There is a slew of additional taxes and fees that you’ll have to deal with as a business owner. These include payroll taxes, sales taxes, personal property taxes, and several others.
Fortunately, for business owners like yourself, you can get a tax refund on these. So, make sure that you file a return on all these expenses.
4. File Returns on Advertising expenses and Legal Fees
Any cost that you incur on the promotion of your business is deductible. While it is easy to file returns for things like website development and SEO, it might get a bit tricky to get a deduction for things like printing stationery. The key, again, is to maintain a proper record of everything.
If your business requires some legal help, then you can file a return on the legal fees that you will have to pay. However, the purpose of the legal fees must be strictly related to your business. Along with that, fees paid to other professionals like financial planners are also deductible.
5. Tax Breaks on Internet Expenses and Meals
It is practically impossible to run a small business without using various services available on the internet. A good news for you is that the cost of your internet services is also tax deductible.
The only thing that you need to ensure is that the connection is used solely for business purposes and is an integral part of your business.
Meals that are a part of your day-to-day operation are also tax deductible. It is a bit tricky to file returns for meals but if you have proper documentation, you might be able to get a substantial deduction.
6. Insurance related to your business
It is always a wise idea to get some form of insurance for your business. The type of insurance depends on your business. However, premiums for almost all business-related insurance are tax deductible.
If your business accepts credit cards, you can file for tax returns to deduct transaction fees and merchant fees paid.
Over to you…
The key to maximizing your tax returns is to maintain proper records of every expenditure that you make throughout the fiscal year. These records will help you prove that all the things that you’re seeking a deduction for are indeed business expenses.