As a small business or investor, every penny counts. Making sure that you are capitalizing on writing off your expenses, and maximizing your deductions will help ensure that you’re keeping as much of your money in your pocket as possible.
Here are 5 tax hacks that will help your bottom line.
- Utilize Expense Tracking Software OFTEN!
- Keep track of your receipts… digitally
- Deduct your home office expenses
- Deduct your vehicle costs
- Utilize any carryovers!
1. Utilize Expense Tracking Software OFTEN! – Keeping track of your business expenses can seem like a big task but it becomes a lot more manageable if you make it a habit and do it often. Whether you use our software, QuickBooks, or even excel, make sure you are tracking ALL of your expenses. Sit down and go over your finances once a week, or even just once a month. Stay on top of everything that you are putting into the business so you can get some of that money back at the end of the year.
2. Keep track of your receipts… digitally – Receipts create the financial dashboard of how you spent your money throughout the year. Many of those receipts are for goods and services that can be deducted on your taxes, offsetting taxable income. Of course, keeping receipts for an entire year is a hassle; many pieces of paper get misplaced or tossed. The solution: it’s 2019, there are many receipt and scanning apps that make it very easy for you to scan your receipts into your phone, and then store the copies in a convenient folder.
3. Deduct your home office expenses – Many small business owners operate from offices at home, but not all of them realize they can deduct expenses related to that home office. These can include insurance, mortgage interest payments, repairs and utilities like internet service. There are qualifications but this deduction can benefit both homeowners and renters and can help you save big come tax season.
4. Deduct your vehicle costs – When you’re deducting expenses you need to calculate what percentage of the time your car is being used for work. For this category of deduction, two types are available: the IRS’s standard mileage rate or your actual car expenses (including insurance, gas, and repairs). Figure out which one makes the most financial sense before filing so you can maximize your savings.
5. Utilize any carryovers! – Some deductions or credits may not be fully used in one tax year and are eligible to be carried over into future years. These can include items like capital losses, net operating losses, home office deductions, and charitable contribution deductions. Track these (or have your software do it), so you don’t forget them from one year to the next.
Make sure to track your expenses so when the end of the year comes, you are able to write off as much as possible.
If you have tax questions, request a consultation. The Advisors at PRIME are here to help every step of the way!