Taxes. If you are self-employed, the myriad tax rules that apply to your income may dampen your entrepreneurial spirit. Especially when you are preparing to file your return. But, taxes don’t have to be such a burden. Take advantage of the immediacy of your situation - what better time to do some planning than while everything is fresh in your mind. Here's some advice on how to get an early start on tax planning strategies for this year:
Retirement savings.
When you're self-employed, you're allowed to set up a retirement plan for your business. Remember, contributing to a retirement plan is one of the best tax shelters available to you during your working years. Take a look at the SIMPLE IRA, SEP IRA, or Solo 401(k), and determine which plan works best for you.Health insurance deduction.
Are you paying your own medical or dental insurance? How about long-term care insurance? As a self-employed individual, you may be able to deduct 100% of the cost of these premiums as an "above the line" deduction, subject to certain restrictions.
The Home Office
If you work from home, you probably have a home office. And if you have a home office, you can get a tax deduction. However, make sure you define a home office the same way that the IRS does. It has to be a space in your house dedicated to nothing else but your business. Claiming this tax break will allow you to get a deduction for insurance, rent, mortgage, electricity, etc. Don't forget furniture, which is a deductible expense.
Your Travel
If your business requires you to drive, then you can claim a mileage deduction. It's a fairly simple process. Take the miles, tolls, and parking costs, and then multiply it by 54 cents to get the deduction amount.
Your travel expenses are also 100 percent deductible, whether you go by automobile, railway, or airplane. But, meals while traveling are only 50 percent deductible, so you might want to take it easy on the steakhouses.
Small Business Accounting Services
You, like most entrepreneurs, probably started your business based on a very specific area of expertise, service, or product knowledge. Now you are faced with managing your business finances - record-keeping and tax filing - and trying to avoid trouble with the IRS. It pays to find out how the professional expertise found in small business accounting services can benefit your situation.
The new tax law takes effect with the filing of the 2018 tax return in 2019. The many changes in the new tax law are complicated and may affect companies differently. Small business owners should consult their tax professional to understand the impact and scope of these changes before making decisions about future investment opportunities.
Are you a small business interested in learning more about income tax services in Washington DC or another location? Myrick CPA offers accounting services for the local Washington DC area, as well as virtual services that are available for people anywhere in the United States. Contact us to learn more: (202) 789-8898