Entrepreneurs have the most complex taxes of anyone because as long as they remain self-employed, their personal taxes include their business taxes. Once they establish a limited liability company or other formal, legal entity, they need to file both business taxes and personal taxes.

Everyone needs to carefully file their taxes, but entrepreneurs must use an added level of care. Within three years of filing, the IRS can audit a business tax return, and the agency can collect back taxes a business owes for up to 10 years. For a business, it’s best to have a tax preparer do the taxes.

Avoid the Payroll Tax Burden

Using a tax preparer helps a business uncover deductions and tax credits available to you. It can result in added savings to the business and perhaps the coveted refund. The prowess of a tax preparer also relieves the business owner of dealing with payroll taxes, something 70% of small businesses categorize a moderate to significant burden, according to ZoomShift.

Separate Your Personal and Business Expenses

Those entrepreneurs who operate as independent contractors need to firmly separate their personal and business expenses. For example, an entrepreneur might send their child to a private school, something that results in taxpayer savings of about $50 billion annually, but the deductions and credits for that must appear only in the personal lines of the tax forms.

Explore Savings You Can Take Year Round

The IRS lets you pay your taxes quarterly. The agency also offers some tax relief options throughout the year, such as a tax credit available only to the self-employed for purchasing health insurance. An entrepreneur, while still self-employed, can take this credit all at once on their taxes or monthly throughout the year, applying the funds directly to the purchase of health insurance through the health care marketplace.

Keep Digital and Paper Records

People digitize so much nowadays, but your tax records need to remain originals for at least seven years. If the IRS audits you, its examiners will ask for receipts. Your receipts need to be originals. Consider keeping your bank records, credit card statements, and major purchase receipts in a paper file format.

Defining a Major Purchase

When you buy a computer, printer, vehicle, convention backdrop, etc., you purchase a major item. These items find a special place for themselves on the business tax forms. Each requires its date of purchase and price. Staples, pens, pencils, etc. don’t fall into this category.

Choosing a Depreciation Method

Major equipment depreciates, such as vehicles do when you drive them off of the sales lot. A business owner chooses the depreciation method to use on all equipment purchased and sticks with it for the life of that equipment. Each year, on the tax form, the business owner applies further depreciation to their equipment and then takes a deduction from it.

Enjoy a Break On Startup Costs

The IRS offers a deduction of up to $5,000 for start-up expenses. The advertising and marketing expenses a business incurs before opening its doors to the public fall into this category. The purchase of initial business equipment, insurance policies, and other tangible and non-tangible assets come under this umbrella, too.

Get to Know Entrepreneurial Taxes

Contact a tax preparer to learn how to save on your business taxes. Take an online class in business taxes to build a strong foundation of the basic knowledge you need to create a proper record-keeping system. Save your receipts and provide them to your tax preparer as soon as tax prep season begins. These guidelines can help keep you out of trouble with the IRS.

Sign Up for Our Newsletters

Get notified of the best deals and latest news.

You May Also Like

What Are The Best Business Cards For A Yoga Studio?

Creating a successful business card for a yoga studio is essential for…

Starting a Moving Company? Here Are 8 Tips!

Starting a moving company, or any other company, is not an easy…

What to Keep in Mind If You’re Starting a Dental Practice

You’ve spent a lot of time studying to be a dentist. Now…

The Best Ways To Spend Your Disposable Income

If you pay your bills and find that you have disposable income…