Enumclaw Chamber Blog

Get Ready - It’s Tax Season!

Get Ready - It’s Tax Season!

By Calvin W. Goings
Regional Administrator

After settling down after the busy holiday season, another season will soon be here - tax season!
As a small business owner, it is important to understand how taxes will affect your business, how to file properly, avoid audits and claim the right tax deductions.

Here are 5 tips to ease the burden of tax preparation and help in preparation for the April 15, 2013 deadline.

1. Keep Good Records and Understand Available Deductions
Proper record-keeping year-round is the first step to ensure taxes are filed accurately. Save essential paperwork that could be needed to back-up deduction claims, should there be an audit. Keep it in mind that tax credits and deductions change each year.

2. Utilize the Small Business Jobs Act Tax Provisions
The Small Business Jobs Act of 2010, signed into law by President Obama, has over 17 tax provisions to decrease tax burdens for small businesses—several of these provisions can be taken advantage of during this year’s tax season. Utilizing these provisions could provide great savings for your business.

3. Remember the tax credits within the Affordable Care Act
These tax credits will allow small businesses to cover up to 35 percent of the health care premiums a small business pays to cover its workers. In 2014, the tax credit will increase to 50 percent.

4. Avoid Common Audit Traps
It is very important to be aware of potential red flags which could include:

• Classifying Employees as Independent Contractors – Independent contractors and employees are not the same and it is important to understand the difference. In the eyes of the IRS, misclassification can be seen as an attempt to avoid payroll taxes; non-compliance can bring penalties and back taxes.
• Home Office Deduction – This deduction is very specific and not all home-based businesses qualify. Know how to determine if you are eligible to claim this deduction and what specific expenses may be deducted.
• Large Sum Miscellaneous Deductions – If you claim a large amount of itemized deductions or miscellaneous expenses, relative to your income, the IRS could get suspicious. Be specific and label every deduction.
5. Keep Business and Personal Expenses Separate – The IRS scrutinizes personal expenses that may have been claimed as a business expense, such as the use of a business vehicle, for personal use. Maintain separate bank and credit card accounts for your business and personal use. Be diligent about keeping good records.
For additional information on these tax tips and current year tax deductions visit the SBA Small Business Tax Guide (http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/establishing-business/taxes) or contact the IRS at www.irs.gov.

Added on 01/09/2013

Filed Under

Chamber News by Enumclaw Chamber Blog

Comments (20)

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