The Best Tax Saving Tips For A Small Business
Have you recently opened up a small business? Are you wondering whether you can actually save money on your taxes? Well, taxation can be quite overwhelming, especially for a small business owner without any prior knowledge on the topic. However, with these useful tips, you should start saving money on your small business taxes immediately.
- Home Office
Numerous small business owners often fear claiming their home office because they are afraid of being audited. However, you need to keep well-organized records to make sure that all the deductions are for the business only. With regards to your home office deductions, here are some of the things you need to keep in mind.
First, the home office should be clearly distinct from the living area. It could be a separate room on its own or part of the larger space but there should be a clear distinction from your home office and the rest of your house. For instance, you can’t claim it’s an home office yet it’s used as a spare bedroom or a play area for your kids.
Secondly, it’s tough to claim one computer as the office computer yet everyone else in the house uses it. However, you have the burden of proof so you can claim that it’s used only for your business or leave it from the office area for the best results.
Finally, it’s quite simple to determine which percentage of your home expenses is deductible from your business. Here, you can start by measuring your work area then divide it by the entire square footage of your home. The resulting percentage will be the fraction of mortgage payments, rent, taxes, utilities and maintenance costs that you can claim.
- Technology Purchases
Any new businesses should always be updated with their technology. Under the tax code any expenses incurred when acquiring equipment such as company vehicles, computers or printers will be tax deductible up to a specific amount. You can either deduct the entire cost depending on the year of purchase or split it on several years but the particular item needs to be considered.
Note that, business software also qualifies under this tax code. Therefore, you should not be afraid of acquiring the necessary software to help you perform various business tasks effortlessly. Of course, you need to be aware of what amount to deduct. Visit msitaylor.com.au for more useful tax advice regarding your small business.