Make It Your Business to Reduce Your Tax Load

Among the many items that the self-employed contractor and small business owner have to think about, would be taxes. And once the word tax is mentioned, the anxiety level usually rises.

What can the small business owner and self-employed contractor do to reduce the anxiety and the tax load? Can you change some things you’ve done in the past to make 2014 a better tax year for your business?

Check out the following for some helpful tips…

Common Self-Employment Deductions You May be Missing

There are quite a few things you can add to your list of your deductions, and though you may already be listing a few of these, maybe you’ll find one or two you haven’t touched on:

* Health Insurance -  Self employed people can usually deduct their health care premiums, which also includes dental and long term care premiums.

* Car -  If you have car or other vehicle you use primarily for your business, you can deduct the expenses of it. These expenses include the cost of driving the car (gas, oil changes and repairs) as well as insurance. There are two ways to deduct car expenses, one is the expenses themselves and the other is using a standard mileage rate. Whichever you do, make sure you keep really good records of all expenditures and follow any rate formulas carefully. Remember, you can’t do this both ways, you have to choose one.

* Home Office -  This is a pretty broad deduction and covers anything from rent or mortgage to heating and air, even property taxes and homeowner’s insurance. However (and this is big however), make sure you adhere to all guidelines regarding things like percentages used for business purposes and size of home office. Everything may not apply to you and your business.

* Internet and Phone -  Like the home office, you need to look at how much is used for business purposes. For instance, a shared home phone line cannot be 100% deducted, but you can do that with a separate business line.

* Publications -  If you subscribe to or purchase industry specific magazines, journals or other business related publications, you can deduct these from your taxes.

How to Avoid Sending up Those IRS Red Flags

Unfortunately, just by being self-employed or a small business owner, you send up some red flags. That is why it’s all the more important to keep detailed records, receipts and information on your taxes and deductions.

If you aren’t sure about a deduction, find out about it before declaring it. You can either talk to your accountant (who you should have if running your own show) or find some good, reliable information online.

If you do have an audit, be ready to show receipts, bookkeeping records, other documents and anything else you need. Keep originals and/or copies throughout the year and some experts say for no less than seven years.

It’s no easy feat to run your own business, and though it can be quite satisfying, it takes a lot of work.

The tax department is one of those areas where you have to be diligent and careful, but you do want to make sure you are completing the proper deductions for your benefit.