Are you an entrepreneur? If so, you should be considering tax structures for yourself and your business. As a small business owner, taxes can be confusing and complicated. You may not know what type of company or structure to set up to get the best tax benefits. Don’t worry – we have 10 tax tips for entrepreneurs that will help simplify things.
1. Keep track of all expenses for tax purposes
It’s tax time! This means it’s also tax preparation time. But with so many tax rules, tax filing deadlines, tax deductions, tax credits, and other tax terms to keep track of – it can be difficult to keep up.
If you are an entrepreneur or own a business, the first and most important tax tip for you is to keep track of all your expenses throughout the year. By properly recording all your expenses and the money spent on the company, you will have everything ready for your annual tax return.
2. How to deduct expenses
When you’re self-employed, you can deduct some of your business expenses from your taxable income. This can lower your tax bill and save you money. There are a few things to keep in mind when deducting business expenses:
a). You can only deduct expenses that were incurred “primarily” for your business. For example, you can’t deduct the cost of your morning coffee if you also use it to relax at home in the evening.
b). You can only deduct expenses that are “reasonable” and “necessary” for your business. This includes things like the cost of materials, advertising, travel, and office supplies.
c). You need to track your expenses carefully and have proof of them.
3. Tax filing requirements
Tax filing requirements differ from country to country. In the US tax return for a business, there are different tax rates for individuals and corporations. Tax filing requirements should be reviewed by the tax lawyer to avoid being overcharged in tax fees.
4. The tax benefits of incorporation
One of the tax benefits of incorporation is that business owners can save money on their tax bills. This is because corporations are taxed at a lower rate than individuals. Another tax benefit of incorporation is that business owners can deduct their business expenses from their income. This includes things like the cost of equipment, office supplies, and travel expenses.
5. When to file your tax return
a). If you’re a sole proprietor, tax season is typically April 15th
b). If you’re an S-Corporation, tax season is typically March 15th
c). If you’re self-employed and have no employees, tax season is usually January 1st
6. How tax rates work and what you should know about them
What tax rates do you pay? Tax rates are one of the most common tax myths. The tax that you pay is determined by what tax bracket you fall into. Tax brackets range in rate from 10% to 39.6%.
The tax brackets in our tax system are progressive, which means that the more money you make, the higher rate of tax you will be paying on every dollar in income.
Lower-income taxpayers pay less tax than higher-income taxpayers, with the lowest-income group (10% tax bracket) paying no tax at all on their incomes up to $18,150 for 2017 and $19,050 for 2018.
7. Claim tax deductions for things like travel, education, and work-related equipment
One of the tax deductions you may be able to claim is for travel. You may also be eligible to deduct education expenses and work-related equipment. Examples of tax-deductible items include public transportation, parking fees, tolls, clothing, education costs, and work supplies.
8. What are some tax credits available to me as an entrepreneur?
Tax credits are tax breaks that reduce the tax liability of individuals and businesses. There are tax credits available to entrepreneurs, including tax deductions for certain expenses related to a business or home office
In addition, some states offer tax credits specifically for small businesses For example, in California, there is a tax credit for hiring employees who have been unemployed for at least six months due to lack of jobs in their area if you’re an entrepreneur looking for ways to save on your taxes this year, explore what’s available in your state.
9. Can I claim losses on my tax return
If you are an entrepreneur or tax filer with losses, then you can use these losses to offset your tax liability. If you have any general questions about tax claims, feel free to contact the tax professionals at Jumping Jack Tax Services for more information!
10. Use tax software to help you file your taxes
If you’re an entrepreneur and it’s tax season, tax software can help you prepare and file your tax return.
Numerous tax software programs will account for the deductions and credits that are pertinent to your tax status as a business owner, which can reduce the amount of time it takes to file your taxes.
It is possible to find free tax preparation software online as well as tax preparation services offered by most accounting firms. This can be a good idea if you’ve got complicated tax returns or if you don’t feel comfortable preparing them yourself.