SMALL BUSINESS TAX TIPS ADIETRA JONES

As we conclude the third quarter and gear up for year-end tax preparations, I thought it would be beneficial to share some frequently asked questions and tips to ensure a productive discussion with your tax preparer.

1. As a small business owner what is the must have tool to have when it comes to keeping track of your income and expenses?

I would say that the “must have” tool is actual documented, accurate and complete records that you can sort and add notes to. Excel works fine as you can download most bank and credit card transactions into a .csv or excel file and identify the nature of the expense. However, if you do a lot of business, it can become quite overwhelming. I personally prefer QuickBooks because it allows you to automatically import those same transactions and categorize them much quicker and easier than doing it manually with Excel.

2. As we are wrapping up 2023 what are some things a business owner can do to make sure they are prepared for the upcoming tax seasons before meeting with their accountant?

Start now gathering your bank and credit card statements. Obtain copies of receipts for any purchases of $1000 or more. Make sure your mileage records are up to date. If you operate in crypto markets, download (or record) the dates and amounts paid. The forms typically provided to the IRS for crypto sales don’t include the cost (basis) so it is up to you to provide the amount cost you paid. The more accurate that your numbers are, the better. Estimate your current profit or loss so that you can make tax positive moves before the end of the year.

3. What are some small tweaks people can do to make sure they maximize their nontaxable income? What are the guidelines for self-employed contributions to Ira/ Roth’s for 2023?

There are several things you can do to lower your tax bill. (Be sure to consult a tax professional for information specific to your situation)

• Pay for your own health insurance.

• Maximize your retirement savings contributions. As a business owner, you have higher limits and more ways to save for retirement.

• Use your car for business purposes and KEEP GOOD RECORDS.

• Keep track of the assets that you purchase - computers, furniture, equipment, vehicles.... These may be depreciated or expensed.

• Work at home? Claim the home office deduction.

• Keep track of interest paid on business purchases - credit card interest, loan interest, or finance charges.

• Find an experienced tax planner and/ or preparer to be sure all of your deductions are claimed.

4. How do I make my life easier as a small business owner and how do I make your life easier as a bookkeeper, tax advisor or tax preparer?

Keep in mind that we are here to assist you. The best way for us to do that is to provide you with accurate information that can only come from complete and accurate information. Provide all of the information needed - bank/credit card statements, tax forms, receipts, etc. Your financials are based on several inputs so having all of the information at one time makes it easier to make informed decisions. One new or changed item can change several line items so it is best to provide as much information as possible. We are not looking for your shopping habits - we want to be able to identify anything you may have overlooked or find ways to save you money.

5. What are the limitations I have in hiring my children for my business and how much can I pay them and deduct within the irs guidelines?

As long as your kids are doing actual work, your business can hire them tax free. Your business deducts the wages and they are not required to pay taxes on the income AS LONG AS it is under the standard deduction amount for single individuals. You can also contribute to an IRA for them up to $6,000 and that amount is typically deductible to the business. Consult a tax professional for more information on your specific situation.