Each year, small businesses in Las Vegas look to lower the tax burdens. Sole proprietor, C or S Corporations, Partnership, and Limited Liability Companies (LLC) all use tax deductions to offset the costs of doing business. The goal is to find the best tax deduction to reduce the liability while providing a benefit for the business. Making a tax mistake as a business owner can be costly. It’s a good idea to meet with a tax accountant to talk about the new small business tax deductions for 2016 that could be overlooked.
Which Small Business Taxes Might Apply?
Understanding the types of taxes and how they are associated as a business expense is the first step. Many of these taxes are deducted from gross receipts as a business cost. It’s a standard practice to help reduce the taxable income for the business.
- Federal and state income taxes are generated from the business earnings. The owner of the business or the business entity pays the tax.
- Employment taxes are mandatory and employers are responsible for deposits. Self-employment taxes are calculated on the net earnings.
- Sales tax is based on the state’s policy for selling goods or services.
- Excise tax depends on the type of business. Some businesses pay excise tax on fuels and highway usage by trucks.
What Are My Tax-Deductible Expenses?
Keeping accurate itemized records of income and expenses is part of the IRS tax law for deductibles. A good bookkeeper comes in handy for this detailed task. Most small businesses use merchant account services. It’s one method for tracking gross sales revenue.
At the end of the year, merchants provide a 1099 tax form to the owner or business for tax filings. It’s important to work with a CPA to take full advantage of the allowable small business tax deductions.
- Mileage and reimbursements of personal vehicles used for business needs to be documented. Deduction amounts are the actual costs or the IRS standard mileage rate, and a bookkeeper can help you maximize your mileage deductions.
- Legal, professional and accounting fees are deductible.
- Deductible travel expenses for business include airfare, accommodations, transportation and meals.
- Business equipment is usually depreciated as a deductible over a certain number of years.
- There’s an option that allows the entire cost of the new equipment to be deducted.
- Salaries and hourly wages to employees are deductible. 1099 contractor fees are deductible.
Can I Further Itemize My Small Business Tax Deductions for 2016?
Daily operational expenses of running the business are deductible. Utility costs have exceptions. If you claim a home office, only the second home line cost for utilities is deductible.
You can take advantage of any of these deductions:
- Rent of the office, storefront, factory or property equipment
- Supplies, marketing, advertising costs, utilities at the office location
- Insurance for general liability, workers compensation, healthcare programs and retirement programs
- Equipment repairs and maintenance
- The cost of website domains and maintenance
- Energy efficiency improvements to your office
Other Factors To Consider
There are several deductible options in a business where off-setting taxes can be beneficial. Selling property with a gain can be used as a tax shelter if the business losses can offset the taxes.
Costs for improving property values are capitalized. The costs can be recovered through deductible depreciation.
- Interest on bank loans for the business is deductible.
- Asset investments or purchasing property for the business offers a tax deduction.
Ultimately the goal for a small business is to minimize the amount of tax liability. It’s done by planning ahead, learning about the business deductions and filing on time. As a result, you get to keep more of the money earned by the business.
For seasoned tax advice in Las Vegas, contact us at (702) 471-7223.