Prior to the tax deadline, you need to prepare your income tax questions. These will be your guide to better understanding your income taxes, which you want to be answered by your tax preparer. Knowing the basics of small business taxes will make you aware of what advantages you can apply as a business owner. Here are three basic income tax questions to ask your tax preparer:
1. What Are the Business Expenses That Can and Cannot Be Deductible?
All of the necessary expenses to run your business are considered expenses. Whatever is needed to move your business is part of the expenditures of your home office.2. What Are the Benefits Regarding Small Business Taxes to a Work At Home Mom?
Having an office at home will be beneficial to a work at home mom. Using a space of your house for exclusive business transactions can allow you to take a percentage of your rent or mortgage costs, utilities and other related expenses, like remodeling and insurance, as business expenses. This gives you savings for your household budget.3. What Other Expenses Can Be Allowed for Deduction?
Entertaining clients and taking trips can also be part of your business expense as long as they are all business related. Traveling out to a trade show for your business can also be another expense, given that you went there for business improvement. Car expenses can be part of your business expenses, considering that you use the car for business transactions. Be keen in knowing the portion of such expenses to be taken as business expenses since the IRS usually focuses on these, making sure that what you have declared as expenses is true.
Even working at home, it is best to separate the business and household expenses. Always keep track of all that you have paid for to manage your home office. Create a separate file of payables and receivables (income and expenses). Most small businesses fail audits not because of improper tax declaration but because of careless recording.