Running your own business can be daunting especially when it comes to finding the right tax help. Here’s a few tips that can help you get ready ahead of time.
Know Those Home Office Deductions
There’s no need to be afraid of claiming home office deductions if you have a business there. Some sole proprietors feel a little uneasy about claiming them on their income tax but there’s no need if you know the difference between what you can and can’t file for.
Here’s a partial list of some of those deductions:
- There’s a fairly easy to use method here to calculate how much of things like heat and hydro can be claimed. It’s usually the same portion as you use for the home office in relation to the rest of your house. Don’t forget to keep all the receipts for these payments either online or in a shoebox.
- Mortgage and home renovations. It’s good to know that you can also claim 100% of any revisions that you do directly to your home office. As far as general renovations to your home, most accountants will allow a percentage of the total cost. However, you should remember that you cannot deduct the cost of your own labor.
- Mileage and travel. Because you are a business owner, the government also allows you to deduct a certain percent of your mileage and travel expenses. It’s interesting to note that these travel expenses can also include lodgings and meals.
Here’s another interesting tax help tip. If you use any vehicle exclusively for your enterprise, you can claim all of the mileage as well as gas and any repairs that are needed.
Understanding how to get the most from these deductions is about getting some experienced help. If you are a sole proprietor shopping for an accountant, some of the following questions can help you find the right business.
Ask any prospect if they have experience in your particular industry. Accounting and taxes is a large very diversified industry. It’s best if you narrow down your search to people who have had experience and understand the levers to pull in your particular line of work.
There are some best practices for sole proprietors who want to stay away from any trouble with the IRS. One of the big ones is documenting everything. It’s important you should keep all the documentation for up to three years. Another tax help tip that makes a lot of sense is keeping your business and personal expenses separate.