Eight Small Business Tax Breaks
Strategies for Deductions in 2008 to Save You Money on Your Return
Small business planning for 2008 begins in January, however if you have not thought about it or have just begun a new home business now is the time to start. The only time it is too late is when you actually file your taxes. Proper planning will result in you getting all the deductions you deserve. Poor planning raise a red flag with the IRS. Sloppy looking returns and indications of poor record keeping will earn you a trip to see your friendly IRS agent.
Small Business Tax Breaks
Here are a eight small business tax deductions you should focus on during 2008 and keep accurate records. In fact, Microsoft Office Small Business edition has an excellent accounting program for keeping track of all your income and expenses, along with other accounting software programs.
- Office – not an automatic IRS audit if you follow the rules. The home office must be a separate room in your home, not a corner in the family or living room. If you claim any children over four on your taxes, the IRS will assume your business computer is for family use not just for business. To claim your home office, find the square foot percentage of your home office in relation to your home. Then use this percentage for deductions on mortgage or rent, electricity, insurance, internet service, etc.
- Supplies – claim 100 percent of everything you purchase for your office use, keep receipts and good records.
- Furniture – this year you can deduct 100 percent of all office furniture deductions without having to depreciate it over several years. Visit Small Business Tax Breaks for 2008 for additional details.
- Computer Equipment – if you are thinking about a new computer purchase or just recently purchased new computer equipment, you can deduct 100 percent without having to depreciate it. Visit Small Business Tax Breaks for 2008 for additional details
- Computer Software – software purchased for business use is 100 percent deductable without having to depreciate.
- Business Vehicle – you can claim the actual mileage you use your vehicle for business use, requires accurate record keeping. Also, you must be in a business that lends itself to needing a vehicle. For 2008, the mileage rate is 50.5 cents a mile for business use.
- Health Insurance – self employed small business owners can deduct 100 percent of premiums, not exceeding your business’s net profits. Cannot be taken if you are eligible for your spouse’s insurance if married. If your spouse is employed by you, then you can deduct your spouse’s portion of the premium as well. Spouse must be doing actual business work.
- Telephone – use a cell phone for your business or have second phone line installed for your business. This is the safest and easiest way to take phone deductions on your small business taxes. If you share the family phone, you can only deduct actual calls by keeping accurate records.
Small Business Tax Strategy
The advantages of small business tax write offs include:
- Lowering your taxable gross income
- Lowers earned income, which may increase your earned income credit
- Computer equipment and furniture deductions are allowed in full, even if purchased on the last day of 2008
- Even if you finance computer equipment and furniture purchases, you can deduct 100 percent in 2008
If you are have or are just starting a small business you need to use all the appropriate tax strategies you can to avoid paying taxes you do not need to pay.
