The deadline for filing your 2012 taxes is rapidly approaching. Whether you tied up last year’s finances months ago or are still scrambling to get all your paperwork in order, now is an excellent time to consider all the ways you can save on your tax bill as the owner of a micro business.
Here’s an overview of three key savings opportunities you can take advantage of this year.
- Healthcare deduction. The Affordable Care Act brought with it dozens of new requirements and opportunities for saving money on taxes. Unfortunately, many small-business owners are still unclear about whether and how they are eligible to save money on taxes by funding employee healthcare. This SBA publication clarifies many of the confusing issues, but here’s a basic rule of thumb: if you have fewer than 25 full-time employees, you pay them an average salary of less than $50,000, and you pay at least half of their self-insurance premiums, you’re probably eligible for the tax credit.
- Home office expenses. The cost of running your home office is tax-deductible, but what exactly is considered a home office expense? Everything from utilities and rent (or mortgage payments) to new equipment, subscriptions, and software you use in that office. Some rules for deducting the cost of equipment have changed in recent years, so be sure to check with your accountant about how you can save the most money for your gear.
- Insurance premiums. As a business expense, business insurance premiums are considered tax-deductible. Be sure to remember this key savings opportunity when preparing your tax return this year.
Documenting Business Expenses for Smoother Tax Filing
In addition to the deductions listed above, small- and micro-business owners can save money on taxes by deducting travel expenses, client entertainment, and contributions to a retirement fund. But in order to ensure a problem-free tax filing process, you’ll need to have adequate documentation.
This means establishing a system for saving and filing receipts throughout the year, from wherever in the country or world your business takes you. Investing a little time now to find a system that works for you has the potential to save you significantly in the years to come.