Hopefully, you’ve already filed your AGRR company’s taxes, but if not, Dominique Molina of CertifiedTaxCoach.com, said some businesses are saving “a few thousand dollars each year in deductions, and in some cases, they save millions.” What can you do to trim down what you owe the Internal Revenue Service?
“Maybe you feel like you can’t get ahead of the cost of your business,” she said during a recent webinar held by SCORE Live Webinars. “It’s not what you make; it’s how you earn your money that makes a difference.”
If you own your own business, be sure to pull your personal bank account statements, she recommends.
“Sometimes it’s hard to tell where we stop and our business starts,” she said. “Chances are you’re going to find some unreimbursed business expenses. Oftentimes when I run out, I’ll put something on my personal account for my business without thinking about it.”
When it comes to gas mileage deductions, many people opt for the standard deduction, she said. But if you drive a larger vehicle, you can take more. A large sedan is 75.5 cents a mile and a four-wheel drive SUV averages 75.7 cents, she said, citing a 2012 AAA study.
How is your business set up? Is it a C-Corp, S-Corp, LLC or Sole Proprietorship?
“Income is taxed differently,” Molina stressed. “Certain things are taxed differently in one entity versus another.”
She outlined the differences this can make for a small business owner.
An S-Corp for example, allows you to give yourself a salary, which breaks up how your company is taxed.
“An S-Corp saves $5,184 each year,” she said.
Some AGRR company owners prefer doing taxes themselves, such as Rick Rosar, president of Minneapolis-based Rapid Glass.
“AGRR companies can do their taxes themselves,” he said. “We do ours, but it takes a little work and knowledge of Microsoft Excel.”
A key tip he’s learned over the years is if you’re getting short pays, “file taxes on the cash basis instead of accrual basis. Most ‘normal businesses’ you can file under accrual because you get paid based on what you bill. If you do that and you are getting short paid, you will be paying more in taxes than you owe.”
Bob Beranek of Auto Glass Consultants, on the other hand, hires an accountant to do his company’s taxes.
“I have my bookkeeper give my accountant the book and let them go,” he said. “I then review and write the check. If I hear of special tax rules that could benefit my particular company, I make sure that my accountant is aware of these and follow up to make sure I was taking advantage of the benefit. … We also formed one company that my other companies feed into so I only have to file one return.”
Have you filed your taxes already or are you rushing to meet the April 15 deadline on Tuesday? Share your tax thoughts by emailing email@example.com.