When you run a small business, keeping up with your tax obligations can seem like a nearly impossible task. Along with those obligations, there are also several special considerations you should know about. If you qualify, they may be able to help lower your tax burden.
1. Your Home Office Space May Be a Deductible Expense
If your business is run out of a home office, or you have space in your home that is reserved solely for business use, you may be able to deduct the expenses associated with that space. You will need to know the square footage of the rooms used for the business, the total square footage of your home, property tax figures, and the cost of utilities. Seeking advice from a qualified member of the United CPA Association can help you determine if this deduction applies to your situation.
2. Medical Coverage Is Treated Differently
While you cannot deduct your personal medical expenses on your business taxes, there are several ways you can save on the cost of health insurance coverage. Premiums paid by the business are generally deductible. You may also be able to contribute to health savings accounts (HSAs) and qualified small employer health reimbursement arrangements (QSEHRAs) for you and eligible employees. These may lower your overall tax burden and out of pocket costs.
3. Tax Payments Should Be Made Throughout the Year
Some taxes should be paid throughout the year. That is because the U.S. tax system is considered a pay as you go one. Be sure you know what actual or estimated taxes should be paid monthly or quarterly to avoid penalties and fees.
No matter what type of business you run, tax time can be stressful. Keeping good records throughout the year will be a big help in sorting through what tax situations apply to you.
