All businesses are legally required to file an annual income tax return. Still, some entrepreneurs may miss out on valuable savings and profit opportunities all year long because they are too busy trying to figure out how much tax they owe and what deductions they qualify for. CPA in Lackawanna County can help in an in-depth analysis.
What expenses can I write off for my business?
Most business expenses are deductible as long as they are regular and expected costs. Office supplies, equipment, technology used by employees, rent on office space, etc., are all everyday deductible company expenses. However, restrictions do apply. For example, only 50% of business-related lunch and eating expenditures can be deducted. The cost of each worker’s journey to and from work is not deductible, but the cost of any business-related hotel stays, flights, and meals is.
How can I lower my transaction fees?
Banks’ transaction fees sometimes fluctuate depending on the amount of a company’s transactions and can pile up quickly. Alternative payment methods, such as Zelle and PayPal, can reduce business transaction costs. Do your homework to ensure the technology behind these options can integrate with your current payment infrastructure.
Should business owners take a salary?
Since an owner’s draw is not considered an operating expense, it does not reduce the company’s profit. It is crucial to note that Sole Proprietorships and Partnerships do not pay taxes on their profits; therefore, any profit the business produces is shown as income on the owners’ tax filings.
Companies should, in general, limit draws to maintain enough cash reserves for ongoing business operations. You are not obligated to take an owner’s draw regularly, even though payroll is processed every time. Payroll taxes are not deducted from an owner’s interest since it is only considered taxable income once it is spent.
How can I report my PPP loan on my taxes?
Paycheck Protection Program (PPP) loans may have tax implications for businesses in 2021, depending on how the money was spent and whether or not the loan was forgiven.
The amount of your 2020 ordinary business deductions is affected by the amount of PPP financing you got. According to the IRS, this year, expenses such as office rent or employee salary can’t be deducted if you utilized forgiven PPP money to cover them.
What are the tax implications of leasing versus buying?
Whether buying or leasing can save your small business more money depends on whether you need equipment, a vehicle, or office space. Owning a car, property, or equipment offers depreciation discounts, whereas leasing does not. Since purchasing property through financing typically requires a smaller initial investment than leasing does, the reverse is also true.