When it comes to tax strategies – Self Employment is one of the best going. With the numerous advantages and savings available, when it comes to tax time, most experts believe it is hands-down the best.
Self-employment allows you full command of your tax situation and, with the right knowledge, you can have greater control over the amount of taxes you pay.
If you are not presently self-employed, these tips will make you want to start looking for a job – one where you’re your own boss.
The most important advice you can utilize as the owner of your own business is to keep thorough and accurate records. Keep all of your receipts and make sure you have the documentation to support your tax deductions.
Do you have children? Just because you work from home, or for yourself, doesn’t mean you don’t need childcare while you are working. If your children are in childcare, take advantage of the credit allowed for childcare costs.
Do you enlist the help of family members with your business? Why not make it a family affair? Employ your family members legitimately and you can deduct their wages, bonuses, and other fringe bonuses.
Did you know that you can help pay for your electric bill with a business in your home? Figure out the space you use for your business and deduct the portion of your household expenses that space costs you: utilities; mortgage or rent; repairs; etc.
You cannot create a loss in your business solely through the use of home office expenses. You can however, reduce your income to zero, thus reducing your income tax and your self-employment tax. Plus, any expenses not claimed in the current year can be carried over to the next.
Do you use your car for business? If your office is in your home, chances are you do. Do you pick up office supplies, make bank deposits or meet clients out? Any driving you do that is tied to your business can be used as a tax deduction.
The Internal Revenue Service (IRS) is very aware of the many tax advantages of self-employment, thus it is an area they are subject to keeping closer tabs on. So, you need to be aware of the latest changes in Tax Law for small/home businesses.