Record Keeping Tips

As a small-business owner, it's hard to know what records to keep and how to keep them so you can easily find what you need at tax time. "Why Business Owners Need to Keep Thorough Records" posted in the Fox News Small Business Center gives tips on how proper record-keeping could possibly lower your taxes.

Use accounting software like QuickBooks or Quicken to categorize your expenses and income. Keep track of capital contributions. "Any time you transfer money from a personal account or deposit cash from your pocket into a business bank account, you have increased your equity position in the business," the author writes.


Bank interest and owner loans shouldn't be overlooked when setting up your financial records. Don't mix up credit-card cash advances or consumer loans in with your income and expenses--these should be kept separate to avoid confusion. "Not only might the business owner, who obviously needed a cash infusion to begin with, hurt himself further financially by paying taxes on nontaxable income, but he is losing a valuable interest deduction by not properly tracking the repayment of the loan or cash advance," says the author.


Finally, don't neglect to properly record periodic income as "other income." 


If you follow these simple steps, you can have less to worry about next time tax day rolls around--and you might find yourself owing less in taxes, too.


Until next time,
Sarah

Prepare for April Tax Season Now

Before 2010 turns into 2011, there are a few things you can do to make your 2010 taxes a bit easier. Start by making sure your bookkeeping is up-to-date. Find receipts needed for tax purpopses and put them together in one place, like a folder or envelope. Maximize your charitable donations before Dec. 31, and make sure you receive proper documentation from the organization for tax purposes. Upgrade old office equipment. Purchasing new or new-to-you computers and other office electronics, etc., can be tax deductible if you work from home. As with any tax information, consult a tax advisor for specifics relating to your particular situation.

Until next time,

Sarah

Some Tax Tips You Should Do Now

Taxes are not something most of us want to think about at all, much less months before the April 15 deadline. But with a bit of planning, you could end of saving on your tax bill.

In "Tax planning is Crucial for Startups," the author lists several ways small businesses--and home-based businesses--can get a jumpstart on getting a handle on their taxes. For example, startup costs can be tax deductible and cover advertising and market research, among other things. Keep all your receipts relating to your business in one file to make it easier to find come tax time. Remember that income taxes are pay-as-you-go, meaning you'll need to estimate quarterly taxes to keep in good standing with the IRS.

The article also lists some webinars and other online resources for tax newbies.

Until next time,

Sarah

Revisiting Tax Returns of Yesteryear

A recent Wall Street Journal article suggests revisiting old tax returns to see if there were any deductions or other business-related items you missed. The returns also can remind you of deductions and carryovers for this tax year.

Personally, I find using Turbo Tax for Home and Business extremely helpful in ferrating out deductions I can take for my home-based freelance writing business.

Until next time,

Sarah

Health Care and Self-Employed Taxes

Recently, I came across this Business Week article ("The New EntrepreneurThe Self-Employment Tax: Into the Swamp") that talked about how the current health-care reform bills would impact self-employed workers who purchase health care. While I am covered under my husband's employer-provided plan, it was enlightening to read about the percentage the self-employed are taxed on healthcare premiums.

The article is also a very lucid description of how the self-employed (those who receive 1099 forms as contract workers) pay taxes. I highly recommend reading it--it certainly opened my eyes to exactly how my taxes are figured out and at what rate they are paid.

Check it out at http://www.businessweek.com/smallbiz/running_small_business/archives/2009/08/the_self-employ.html.