Some More Notes On Reducing Your Business Taxes

I’d like to add some additional tax tips regarding reducing your taxes that apply to your business operation run from your home. Some of your taxes that may be allowable by the IRS will probably be deductions that are specifically applicable to your type of business. In my particular field, I get a deduction for the specialized insurance that I have to have when producing a video project. This insurance covers a wide area of things that have to be insured when shooting a video project. Video production requires video/film equipment rental insurance, E&O insurance(Errors & Omissions), worker’s compensation insurance to property liability, etc.

The important thing you want to remember regarding deducting any expenses for tax purposes is, and this is very, very important, you must keep very detailed records of all expenses your business has incurred. Keep the following tips in mind and they may result in some real tax savings in your home business operation:

Keep a record of all deposits made to your business bank accounts and personal bank accounts. Whether monies coming your way are taxable or not, record them! Nothing turns the IRS on more than looking for unreported business income!
Always remember to deposit all money made from your business into your business bank account, not your personal account. Keep these two accounts separate. Once deposited into your business account, you can then transfer funds to your personal account. But deposit in your business account first. Otherwise, “Render unto Caesar what belongs to Caesar first.”

Check to with the IRS, your state, your local municipality, etc. to find out whether you are to make quarterly estimated payments or payments at another time frame. Check with the IRS at: www.IRS.gov regarding their requirements for business payments.

If possible, try to obtain a business credit card in your company’s name. Personal credit card interest is not deductible but business credit card interest is 100% deductible.

Always remember to keep all original receipts from any business expenses you charge. Don’t depend on monthly statements because they don’t provide enough specific information regarding the expenses incurred.

Keep all receipts together in one place. Whether a box, an envelope, a folder, etc. No matter what you keep your receipts in, Keep them all together. Trust me, at tax time, you’ll be glad you did.

If your home business requires that you make use of your personal vehicle for transportation, make sure you keep a log book of mileage used for business purposes. But remember, this deduction is only given for mileage used for business purposes only. If you’re going to claim business mileage for driving over to visit Aunt Martha for tea, you ‘d better have proof that the real purpose of your trip wasn’t a family visit but to deliver Aunt Martha that custom made wooden desk that she ordered from you. The IRS loves to disallow business mileage unless there is proof that the mileage was accumulated for business purposes. So remember, keep a mileage record log book.

Although this is not a requirement, my suggestion is to invest in a good accounting software program such as QUICKEN, QUICKBOOKS or some of the other spreadsheet-accounting software programs now on the market. This is also tax deductible and well worth the investment. It also will make your business life a heck of a lot easier.

Also, maintain an appointment book and business calendar. This will also aide you in substantiating your many of your various business expenses. Bottom line is, you want to have all the bases of your home business covered when dealing, especially with the IRS.

Reducing your taxes will help in increasing your profits. And that’s what it’s all about.