Keeping meticulous records is the key to tax deductions and painless IRS audits
Businesses must keep records of their income and expenses. Carefully record them in order to claim the full amount of tax deductions to which you’re entitled. You also want to make sure you can defend the amounts on your tax returns if you’re ever audited by the IRS. Certain expenses, such as automobile, travel, meals and home office expenses, require special attention because they’re subject to special recordkeeping requirements or limits on deductibility. Contact us if you need assistance retaining adequate business records. By taking a painstaking approach to how you keep records, you can protect deductions and help make an audit much less difficult.
Let your financial statements guide you to optimal business decisions
Business owners: No matter how busy things get, don’t overlook the informative value of your financial statements. Assuming you follow U.S. GAAP or similar reporting standards, yours will have three major components: 1) The income statement, which shows revenue and expenses over the accounting period. 2) The balance sheet, which tallies assets, liabilities and net worth to take a snapshot of your financial position. 3) The statement of cash flows, which shows cash inflows and outflows from operating, financing and investing activities. Financial statements contain a wealth of data that can allow you to identify trends, both good and bad, affecting the business. Contact us for help.
Smooth sailing: Tips to speed processing and avoid hassles this tax season
The IRS began accepting 2021 individual returns on Jan. 24. Here are three quick tips to help speed processing and avoid hassles this tax season. 1) Contact us soon for an appointment to prepare your return. 2) Gather all documents needed to prepare an accurate return. This includes W-2 and 1099 forms. In addition, you may have received statements or letters in connection with Economic Impact Payments or advance Child Tax Credit payments. 3) Check certain information on your prepared return. Social Security number(s) should appear exactly as printed on Social Security card(s). Make sure names aren’t misspelled. If you’re receiving your refund by direct deposit, check the bank account number.
Entrepreneurs and taxes: How expenses are claimed on tax returns
While some businesses have closed since the start of the COVID-19 crisis, many new ventures have launched. If you’ve recently started a new business, or you’re contemplating starting one, be aware of the tax implications. Not all start-up expenses can be deducted on your federal tax return right away. Some expenses probably must be amortized over time. You might be able to make an election to deduct up to $5,000 currently, but the deduction is reduced by the amount by which your total start-up costs exceed $50,000. You can also deduct $5,000 of the organizational costs of creating a corporation or partnership. Contact us. We can help with the tax and other aspects of your new venture.
Using B2B media to lengthen your marketing reach
Marketing is tough for companies that sell products or services to other businesses. You must not only persuade customers to buy from you, but also communicate that you’re an expert in your industry or field. Getting involved in business-to-business (B2B) media can help. For example, send out press releases announcing new hires, products or services, or other developments. Or you could write bylined articles for selected industry publications. Just make sure they don’t read like free advertisements. You might also bypass traditional media outlets and focus on blogging and social media. If you do, set an editorial calendar and stick to it. Contact us for help assessing B2B marketing costs.
Numerous tax limits affecting businesses have increased for 2022
A number of tax limits affecting businesses are annually indexed for inflation and many have increased for 2022. For example, the Section 179 expensing limit has gone up to $1.08 million from $1.05 million in 2021. Health Savings Account (HSA) contributions for individual coverage have increased to $3,650 (from $3,600). HSA family coverage contributions increased $100 to $7,300. Employees can contribute $20,500 to a 401(k) plan in 2022 (up from $19,500). 401(k) “catch-up contributions” are $6,500 (unchanged from 2021). And the deduction for business-related meals and beverages provided by a restaurant is 100% for 2022 (and 2021). We can answer any questions about taxes and your business.
Help safeguard your personal information by filing your 2021 tax return early
The IRS is opening the 2021 individual income tax return filing season on Jan. 24. Even if you usually don’t file until closer to the April deadline (or you file an extension), consider filing early. It can potentially protect you from tax identity theft. In these scams, a thief uses another person’s personal information to file a fraudulent return early in the filing season and claim a bogus refund. Another benefit of early filing is that if you’re getting a refund, you’ll get it faster. And if you were eligible for an Economic Impact Payment or advance Child Tax Credit payments last year and didn’t receive them, you can claim them on your 2021 return.
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