6 Small Business Tax Questions Answered

December 6, 2016

Filing taxes for your small business can be a hassle if you don’t have accounting experience and are juggling many other responsibilities as a successful business owner. Hiring a professional to help you file your taxes is a beneficial way to ensure your business tax needs are met and filing is completed correctly. Before you take on filing your small business taxes yourself or employing someone else to do so, take a look at these 6 common tax questions and their answers:

What Can I Expense?

Any expense that is ordinary, necessary, and reasonable that aids in increasing business income is able to be deducted. Items like computers, desks and chairs, and other office equipment are deductible expenses. If you have a home office, you can expense the mileage between your home and any business-related destination. If you have an office outside your home, the travel between home and work cannot be expensed, but travel between your office and business meetings or appointments at other locations can be.

What Important Documents Do I Need to Keep?

For tax purposes, it is crucial to keep financial records and documents pertaining to each of these categories in a safe and organized place:

• rent
• utilities
• automobile expenses
• advertising
• business travel
• professional/legal fees

Can I Deduct Insurance Costs?

Premiums that are related to worker’s compensation, property, liability and malpractice are usually deductible as business expenses. Depending on what type of business you own, you may also be able to deduct commercial vehicle and insurance premiums. Small business owners can oftentimes also deduct premiums paid for medical/dental insurance.

What Forms Need to be Filed?

Whether you’re doing your business taxes yourself or a professional is filing them for you, it’s good to know which forms are necessary:

• Form 1065 (if you are a partnership) – used to report income, losses, and expenses.
• Schedule C (if you are a sole proprietor) – used to report business income and expenses as an attachment to your personal income tax return.
• Form 1120 / 1120S (if you are a corporation) – also used if you have a Limited Liability Company (LLC) that is treated as a corporation.

   

Accountants and tax preparation professionals are well versed in the tax form requirements specific to each type of business and can easily prepare and file the correct forms appropriate for you.

What Extras Can I Write Off?

Keeping track of all business expenses, no matter how big or small, can be helpful to business owners when it comes time to file taxes. As an owner, you can expense things you wouldn’t normally think of, from book purchases to your internet bill and mobile phone plans.

Can I Get an Extension?

If you are having trouble getting your small business’ tax paperwork together and don’t think you will be able to file on time, you can file for an extension. However, you will still have to pay on time if you owe money. Getting help from a tax professional will ensure your taxes will be filed on time, every time!

Relate CPA is a reputable accounting firm that services the Carroll, Howard, and Baltimore County areas. If you own a small business and have questions about filing your taxes, or would like to take advantage of our filing services, contact us today!