More than half of all U.S. businesses (53%) are run from home. If you are one of these home business owners, you may wait until tax time to think about filing your return and ways to save on your taxes.
However, by then it’s often too late to take steps that can dramatically and legally slash your tax bill. Tax planning year-round helps benefit your home business come tax time. To that end, here are some things you can do now to obtain a better tax outcome when you file your return.
Keep Track of Expenses
The tax law requires you to keep good books and records for your business, which means recording your income and expenses in an accounting system. Just because you wear slippers and pajamas to your office doesn’t mean you can be casual about this responsibility.
Keeping complete and accurate records will help you maximize your deductions for expenses such as travel and entertainment, which will help to minimize your tax bill. Recording your income and expenses is easy to do (no knowledge of accounting is required) with software or online solutions—some of which are free.
QuickBooks is the leading small business software; there’s a free online version called SimpleStart Free. Microsoft also offers accounting software called Office Accounting Professional ; there’s also a free online version, Office Accounting Express .
In addition to recording your income and expenses, also retain receipts, invoices, and other documentation of expenses you incur.
Author: Barbara Weltman
Copyright 2009 StartupNation, LLC
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