It’s that time of year again. Tax day (April 18) is approaching. Get your receipts ready and your tax preparer on speed dial! Want some tips to make your life a little easier? Here you go.
- If you're a solo entrepreneur with assets (house, car, etc.), consider changing your company’s designation from a solo proprietorship to an LLC or an S Corporation so that your personal assets are separated from your business ones, offering more protection for the former.
- If you are an LLC, consider filing your tax returns as an S Corp so that you can get some tax breaks. For instance, if you’re a shareholder of an LLC that files its taxes as an S Corporation, your distributions are not subject to employment tax.
- If you have hefty quarterly payments and are struggling to pay them, consider asking for a payment installment plan that you can handle.
- The IRS only goes back 3 years for tax audits. Keep your papers 5 years to be safe. Gone are the 7 years recommended in the past.
- You need to open a business banking account if for no other reason than to make an audit run more smoothly. You don’t want an auditor wading through your personal affairs to locate your business interests.
- If you travel anywhere with your vehicle for a business related purposes (networking event, conference, dinner, etc.), you can deduct the actual vehicle expenses or the standard rate per mile driven. For 2015 tax year, the standard rate is 57.5 cents per mile driven.
- When you expense meals and entertainment, write down on the receipt who was in attendance as well as the purpose of the event. Your tax preparer will thank you!