First Posted: 12/27/2012 1:57:57 AM | Last Updated: 12/27/2012 2:03:48 AM
On Line Advertising for small business owners and entrepreneurs is #1 tax deductions in 2012 !
By Twomucht, Topix National News Editor,
Its going to happen either way in April 2013. Taxes are going to be sought by Uncle Sam. For most Americans, this will be the ocean of undertow of taxation.
However, for the small business owners and entrepreneurs, the taxation pull might seem less stressful if they know how to pay for services and products needed in their business prior to the end of 2012.
What if you could reduce your tax obligations as a business owner this year, for services and products you already need, and receive a tax reduction.
Your Office cost...Your advertising costs...Your travel cost...Your business office/supplies...Your education/training...Your health care cost may be completely, or partially be 100% deductible from your business tax obligations.
Below is a little more info on each one:
Small business owners are also eligible to deduct their advertising and promotional costs. This includes any of the following promotional mediums:
Radio spots TV commercials Billboard ads Direct mail Search engines (PPC) Trade journals If your business advertises its products or services through any of these methods, all expenses incurred to do so are 100% deductible. The key, as with the other deductions, is to keep impeccable records. Small business owners are audited more frequently than most taxpayers, according to an IRS report on the income tax gap. If you get audited, having proof of your ad costs will be a major help.
2.) Home Office
If you operate out of a home office, the IRS permits you to deduct these costs on your personal income tax return. In his book Own Your Own Corporation, Garrett Sutton writes that you do this by deducting a pro-rated portion of your:
Rent/mortgage payments Utility bills Property taxes
Your home office deduction largely involves how much space you are using. As TurboTax explains:
“Your home office business deductions are based on the percentage of your home used for the business.
The most exact way to figure this proportion is to measure the square footage devoted to your home office and find what percentage it is of the total area of your home.
If the office measures 150 square feet, for example, and the total area of the house is 1,200 square feet, your business percentage would be 12.5% (150 ÷ 1,200).”
3.) Business-Related Travel
Does your business have you out on the road (or in the skies) to meet clients and partners? If so, these business travel costs are also legally permitted deductions on your personal income tax return.
The IRS explains that only “ordinary and necessary expenses of traveling away from home for your business, profession or job” may be deducted. You cannot deduct any travel costs that are “lavish or extravagant or that are for personal purposes.
” In other words: don’t get any clever ideas about calling your romantic getaway to Maui a “business trip,” because the IRS will scrutinize and likely reject such a deduction.
If, however, you are legitimately traveling somewhere to get documented business done, feel free to deduct these costs on your next return.
4.) Office Supplies & Equipment
Virtually all businesses require certain office supplies to operate throughout the day. These include:
Paper Pens Desks Computers Printers (and ink/toner) Etc.
Because these are valid, “ordinary and necessary” businesses expenses, they can all be deducted.
Be warned, however, not to simply stockpile excessive amounts of office supplies to reduce your tax bill. While there is no legal limit to how many of these things you can write off, your goal as a business owner is maximum after-tax profit, not minimum taxes.
Sometimes, minimizing your tax bill beyond a certain point actually reduces your after-tax profit.
5.) Education & Training
Savvy business owners know how important it is to stay on top of the latest information, techniques and developments in their fields.
Fortunately, the IRS recognizes this as well and enables all business owners to deduct the costs of education and training materials. This includes:
Magazine subscriptions (provided they are educational in nature) Instructional seminars Newsletters about your field or business Home-study courses pertinent to your field or business Again: there is no legal limit to how much information or training you can consume or deduct. The only requirement is that you thoroughly document these expenses (by keeping dated receipts) so that you can substantiate them if ever they are questioned by an IRS auditor.
6.) Health Insurance
Being self-employed means paying the full freight of all health care costs on your own.
But while this will certainly increase your out-of-pocket expenses, there is some relief in knowing that unlike employees, entrepreneurs can deduct all of their health expenses. This includes the following forms of coverage:
Health insurance policies Dental coverage Vision coverage Non-cosmetic procedures you have paid for yourself Health savings accounts are another legally recognized and fully deductible health care expense.
Final deductions should be calculated by a certified CPA. First question to ask he/she is how much they paid last year!