If you are a small business owner or self-employed, you are eligible for many special tax credits and deductions. However, if you don’t know to take advantage of them, you may miss a lot of savings.
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Gobankingrates spoke with Turbotax expert and CPA Ismail Mohamed to get his highest tax tips for entrepreneurs and other self-employed people, including the credit and deductions they need to know.
If you are a small business owner or self-employed person, you can deduct many of the expenses you have to do business to keep your business.
“Self-employed individuals can deduct a variety of business-related expenses, including home office expenses, business travel and equipment,” Mohammed said. “Be sure to keep detailed records and receipts as these deductions can reduce your overall taxable income.”
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Article 179 provides major tax benefits that you may not know about.
“Section 179 of the tax code allows businesses to deduct the full purchase price of qualified equipment and software, with a maximum limit, which is in the year of service, rather than depreciating over time,” Mohammed said. “This can be an important tax benefit for small businesses that can be spent immediately and reduce taxable income.”
To make the tax filing season more efficient, your personal finance account and business account must be separated.
“It is important to keep a clear separation between business and personal finances,” Mohammed said. “Open a separate bank account and use a dedicated credit card for business expenses. This makes it easier to track revenue and expenditures, simplifies tax preparation, and provides a clear audit trail. Mixed funds can lead to complications and potential problems with the IRS.”
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This article originally appeared on gobankingrates.com: I am an accountant: These are tax tips you need to know when you are self-employed
