An article in Boston.com called Too Late to Lower Your 2011 Taxes? Not At All listed a few of the deductions a business owner can still take advantage of this year.
Here are three Tax Help Tips that every business owner needs to know about for this tax year:
1. Fund a Retirement Account
You can reduce your 2011 taxes by starting a retirement plan or Simplified Employee Pension (SEP) for you and your employees before October 15. With relatively little paperwork or filing necessary to the IRS, you have the ability to start a SEP account and deduct the amount of the contribution from last year’s income. It is also possible to take deductions on contributions to existing retirement plans such as a 401(k), and Simplified Employee Pensions (SIMPLE) also by the October 15 deadline. For more detailed information the IRS website has information on Small Business Retirement Plan Deductions.
2. Got Net Losses? Take them!
Businesses that suffer a net operating loss are able to use that loss to offset income for the following year or in some cases future years (depending on the size of the loss.) According to the article, business owners can either take a net operating loss carry back: using the loss to offset previous years’ income, or (if there is money left over) take a carry forward and offset income for up to 20 years. A certified tax professional can assist with the back tax amendments regarding the carry back.
3. Review Your Records for Deductible Expenses
Reviewing your books and important business papers a second time might reveal other deductible expenses such as overlooked home office expenses. For example, if you own your home, you can take deductions on portions or some of the home repair costs. You are also allowed to deduct some of your car expenses if it’s used for both business and personal reasons. Personal records should also be checked to see if any business expenses were forgotten. A business owner is also encouraged to hire a tax professional who will make sure the business is taking full advantage of all the tax deductions available.
Related posts: