7 Self-Employed Tax Tips Every Entrepreneur Needs to Know

The United States is home to over 30 million small businesses. For most small business owners, finding a way to create a competitive edge is important.

As your business begins to grow, so will the complexity of your tax obligations. Learning help self-employed tax tips is essential when trying to avoid problems with the IRS.

Failing to take the tax obligations your business have seriously can cause a number of costly errors to be made. Your main concern in regards to your taxes should be to reduce the amount you have to pay each year.

With the help of self-employed tax advice professionals, you can devise a strategy to reduce the financial burden of your yearly tax bill.

Read below to view helpful self-employed tax tips that can help you greatly.

One of the Most important Self-Employed Tax Tips to Know is Keeping Detailed Records is Vital

The biggest mistake that most newcomers to the world of self-employment make is failing to keep detailed financial records. The Internal Revenue Service demands that business owners keep records of all of their income and expenses. This means you will have to save all of your receipts and keep them accessible.

Most business owners don’t have the time or the experience needed to maintain the financial side of their company. With a bit of research, you should have no problem finding business tax professionals to help you. If you are looking for information on the various tax services on the market, view here for reviews of these services.

Don’t Forget the Office Space Deduction

Regardless of if you are using a separate office facility or a room in your home to run your business, you may be entitled to tax deductions. The IRS allows business owners working from home to deduct a percentage of the home that is used exclusively to run a business. Things like utility and phone bills need to be kept throughout the year in order to see how much of a deduction you are owed.

Before you file for this home office deduction on your own, consult with your accountant or a tax professional. They will be able to detail the IRS stipulations for these deductions. If you do qualify, then you may be able to reduce your tax burden significantly.

Keep Track of Your Business Expenses

If you do a lot of traveling for your business, keeping the receipts from these trips is essential. You can also deduct things like business entertainment and even office supplies on your yearly tax return. The IRS will also allow a business to deduct the cost of upgrading software and any other technology-related expenses a company incurs.

The only way you will be able to take full advantage of these deductions, you will need proof of these expenses. This is why having an accountant to help you keep track of receipts is so important. Often times, the amount of money paid to an accountant will be worth it considering how much they can save you when filing your taxes.

You Can Deduct Child Care Costs

Finding the right balance between work and home life can be hard for new business owners. Often times, business owners will have to put their children into daycare in order for them to be able to work.

If you are currently paying daycare bills for your children, you can get a tax deduction for these costs. Whether you are using a traditional daycare or have hired a nanny to take care of your child, you can get a sizeable deduction.

Get Deductions for Health Insurance Costs

Most self-employed individuals have to pay their own insurance costs. While having health insurance is essential, it can also be quite expensive. Luckily, the IRS will allow a self-employed individual to deduct the amount of money they pay each year towards their health insurance.

Not only can you deduct the amount of money you pay for your health insurance, you can also deduct the cost of providing your spouse and children with insurance.

Accurately Recording Employee Taxes

As your business begins to grow, you will need to hire employees to help lighten your workload. Failing to hire employees can lead to you getting overwhelmed and may also cause you to lose customers. Once you have the right employees in place, you need to make sure you are withholding taxes from their checks.

You will also need to pay unemployment tax, as well as match Medicare taxes required by the federal government. The last thing you want is for your employees to get in tax trouble due to negligence on your part. With a bit of professional help, you can rest assured employee taxes are handled properly.

Collect Sales Taxes if Applicable

If your business sells goods to the general public, you will need to collect sales tax on each of these transactions. At the end of the year, you will need to fill out a sales tax return.

This return will detail all of the taxes you have collected throughout the year. Failing to collect the right amount of sales tax can lead to big problems with the IRS.

Looking For Professional Tax Help?

The best way to get self-employed tax tips is by consulting with professionals. A tax accountant will be able to provide you with helpful information regarding how to keep track of your tax expenses.

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