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Before Deducting Your Company's Liability Insurance, Check with an Accountant

4. June 2015 08:16

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Taxes: they already have a reputation for being tricky and stressful for small-business owners, but a certain section of the tax code may make them even more unpalatable than usual. According to Forbes, your insurance premiums may not be deductible in every situation. Here's what the article states:

We suggest you read the entire article if you're looking for specifics. In short, there are two takeaways from this complex overview:

  1. Taxes are never simple. Even when you think you understand the basics, a wormy bit of code can change the game.
  2. Accountants are invaluable. You don't have to rely on Internet articles to get the information you need about tax law and business deductions.

Let's expand on those two points a little more so you can make smart financial decisions for your business.

Accountants: A Small Business's Imaginary Friend?

It's well known that accountants are the go-to resource for help with taxes and bookkeeping, but a survey by Sage North America shows that small businesses have a penchant for underutilizing accountants. To be exact...

A survey by GoDaddy found similar results:

While nearly half of small businesses don't work with an accountant, they could certainly benefit from doing so. An accountant can help them remove the guesswork from their financial situation so they know exactly how much revenue they bring in, how much they owe in taxes, and how to manage their money so they don't have to panic when it's time to pay Uncle Sam.

Crunching Numbers: How Does an Accountant Save You Money?

If you handle taxes on your own, you may miss opportunities to cut down your tax bill. Unless you are fluent in tax law, chances are you don't know all the regulations surrounding business deductions, so you run the risk of deducting too much or too little. Both mistakes cost money. If you deduct too much, you could be flagged for an audit, which takes time and money to address. If you miss out on key deductions, you're probably paying more than you need to.

In other words, filing taxes for your business is not something you can phone in. Working with an accountant throughout the year can help you anticipate your tax bill so you can set aside funds and pay your quarterly taxes with confidence. An accountant can also ensure you avoid filing mistakes and take advantage of every feasible deduction (including those for business liability insurance premiums!).

For more tax tips, read How to Make Your Small Business Taxes Better Next Year.


Accountants & Bookkeepers | Small Business | Small Business Risk Management | Small Business Trends | Tips for All Small Businesses

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