5 Tax Breaks Overlooked By Small CompanySmall Company Owners

April 1, 2015 Nemes Random

For the small business owner, tax season can be demanding, and the prospect of shelling out a load of cash to the government is not amazing. That’s why small companysmall company owners love tax benefits. Here are 5 tax benefits that are frequently ignored by small companysmall company owners that can conserve your company cash. (For associated reading, see: Beginning A Small Business: Taxes.)

Please consult your tax expert prior to following any of the ideas below. If you do your taxes yourself, there is a resource which compares the online providings of TurboTax, TaxAct, and HR Block.

1. Have Lunch Conferences

If you frequently purchase lunch (eat-in or take-out) while you are working, you may be able to subtract 50 % of dish expenditures. If you and your business partners or staff members have meetings, think about having conferences over lunch. As long as the dining expenditures are reasonable, you are allowed to deduct 50 % of meal expenses when eating with company partners and employees while performing company operations. If you buy lunch every day and spend around $8, you can subtract $4. If you do the math, that amounts to over $1000 a year in claimable reductions ($4/day x 5 days x 52 weeks).

2. Use Your Personal Cellular phone For Business Calls

Let’s say you make use of around 30,000 minutes each year on your phone, for both personal and company factors. You spend around 60 minutes a day on company calls for the average work week. That’s around 15,600 minutes a year you will investinvest in company calls (60 minutes/day x 5 days x 52 weeks)– over 50 % of your total annual phone minutes. Based upon the figures in this scenario, you might subtract over 50 % of overall yearly individual cellular phone costs as a business expense.

The key is to make certain you are getting a made a list of list of your monthly phone expense, so that you have evidence in case the IRS would ever decide to examine your company. It would be wise to obtain a separate company number that routes to your phone, making incoming calls much simplera lot easier to separate. Assuming a $100-per-month phone expense (typical costs over $100/month) and a 50 % deduction, you could save an extra $500 in deductions ($100/month x 12 months x. 50 reduction)

3. Deduct Your Healthcare Premiums

If you have an individual health planhealth insurance (can not be a group plan) and pay your health care premiums out-of-pocket (can not be pre-tax) without tax breaks or subsidies, you can most likely claim those premiums as an earnings tax deduction. To claim this reduction, you have to be a sole owner, partners in collaboration, or an LLC, or S corporation shareholder who owns more than 2 % of business stock. Let’s state you are a sole proprietor and your business/personal earnings was $60,000 and your state and federal income tax commitments are around 30 %. If you invested $10,000 on health insurance coverage premiums for you, your partner, and your dependents, you can deduct that to make your total income $50,000 instead of $60,000, conserving you around $3,000 in total earnings tax payments.

As a companya company owner meeting the criteria above, you can claim a $10,000 income tax break, however not a break for self-employment tax, which would continue to be at $60,000 taxable income(Small companies pay both.). However, if your partner is an employee of your business, you can get both. You can buy a plan in his/her name (not in the name of the business) that covers the 2 of you and your dependents. Since she is both a worker and your spouse, you can deduct the full $10,000 in payments from both your company earnings tax and your self-employment tax, presuming you submit jointly. In this scenario, you could conserve $3,000 on earnings tax and an extra $1,530 in self-employment tax, for overall cost savings of $4,530. (To check outcheck out other tax benefits that self-employed individuals can take benefitbenefit from, see post: 10 Tax Advantages For The Self-Employed.)

(For a further description, see this article.)

4. Manage your taxable income so that you end up in a more favorable tax bracket


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