When it’s tax season, whether you are celebrating or mourning this time of year,as an independent business owner with your home based business, you may be able to take advantage of some business tax deductions; so here are some tips to follow to help make this year and next year’s taxes easier to manage.
1) Educate Yourself. Owning your own business is a great adventure that has a million different roads and highways you can take. Make sure you are on this adventure with a map and compass… in the form of books and resources. You will need to order a couple books, go to the library, or find some on-line tools to educate yourself on small business accounting. You only need to get the basic understanding so you know what to track through the year and what can be considered a deduction.
2) Keep Every Receipt. Take a trip to the local supply store and invest in one of those small accordion filing systems, the size of an envelope. Label the tabs January, February, March, April… all the way to December. Every time you empty your wallet of receipts, put them in there. As you follow step 1 in educating yourself, you’ll learn which receipts can be applied to your taxes.
3) Develop A Filing System. Having a place to keep papers, monthly bills, industry news, etc. is vital to a successful business… and a successful tax filing. Do what works. Some people use a shoebox, others use software like Quick-books while others still use a filing cabinet. Just have a place you can go back to regularly to find your business-related paperwork.
4) Create a Monthly Profit and Loss Statement. Having these 12 pieces of paper handy at tax time will help you more than anything else. Besides, knowing the pulse of your business month to month will help you create goals to aspire to and actually help increase your business.
There are obviously much more that goes into filing taxes for your home business… but implementing these quick tips will make doing your taxes next year a cause for celebration! As your business grows, you will want to consider working with a tax adviser to help you track your business and maximize your results throughout the year.