For many small- and medium-sized business owners, February marks tax preparation and filing time. Of course there are some last-minute filers who delay until mid-April. But business owners who are on top of their financial and operational affairs recognize February as the time to prepare.
Though tax preparation is a hassle and inconvenience, many business owners are concerned most with missing out on important tax deductions. With the laws changing and updating every year, it is easy to overlook a deduction or two. According to business tax experts, some commonly missed deductions include:
- Business-related Auto Expenses — Gas mileage, tolls, and even parking costs can be legitimately deducted. But business owners who use a car for company and personal use must take care to distinguish the two expenses when filing.
- Uncollectable Debt – Business owners who are unable to collect on goods provided to a customer may be able to deduct the cost of those unpaid goods. Those business owners with a significant amount of uncollectable debt should pay attention to this rule.
- Office Furniture, Equipment and Supplies – Though it is important to be forthright in uses of these purchases, business expenses are generally regarded as deductible. From desks and chairs to photocopiers, paper and computers, many everyday items used in business qualify. However, the laptop the business owner bought for his child as a gift probably does not count as a deduction.
- Costs of Business Travel – From hotels to dining out to tipping, expenses related to business travel are deductible, some by as much as 100 percent. Along with the trip itself, the costs of attending educational or training seminars are also deductible. For these reasons, it is good business advice to keep all receipts for tax purposes.
Pay Taxes with the Help of an Invoice Factoring Company
All of these considerations can add up to a lot when reducing taxable profit and managing small business finances. The goal is to pay as little in taxes as possible while staying in Uncle Sam’s good graces. Legitimate tax deductions are a sure way of doing this, but business owners must stay within the parameters of what the law allows. And because the laws are ever-changing, it is best to consult an accountant who is familiar with small business financing and tax issues.
For those business owners who end up owing money, they need to make paying their taxes a priority. Obtaining cash by factoring receivables or by making use of invoice factor services is a way businesses can pay their taxes on time.