Death and taxes are two things you can count on in life, and neither one is something most people look forward to. The more you know about how to prepare your taxes and what can be deducted, the more you'll get to keep in your pocket.
Whether you have a home based business or a business outside the home, you must keep good records to justify your deductions. Sandra Hunsicker, of Sandra Hunsicker Bookkeeping Services, says she finds that most small business people are good at understanding their business, but inefficient at keeping up on payables/receivables, postings, oversight of bills, profit and loss statements, etc. A bookkeeper, such as Hunsicker, will handle the daily or monthly bookkeeping tasks and present all the information needed to either hand to an accountant or allow you to do the taxes on your own.
Kim Fichera of Fichera & Company, CPA's, agrees.
"Preparing taxes goes so much quicker, if the business person keeps their books clean during the year". Fichera recommends that small business people who use Quik Books send their bookkeeping to their accountant occasionally during the year to determine if everything is on track and to avoid mistakes that will cost more later on.
Keep in mind, even your accountant may not know that you qualify for some of the new credits if they're not completely familiar with your business. Following are some of the tax changes for 2006 to keep in mind.
Self-employment tax – The maximum net self-employment earnings subject to the social security part of the self-employment tax increases to $94,200 for 2006.
Standard mileage rate – The standard mileage rate for the cost of operating your car, van, pickup, or panel truck in 2006 is 44.5 cents a mile for all business miles.
New and revised credits for 2005 and 2006:
Alcohol fuel credit
Alternative fuel vehicle refueling property credit
Alternative motor vehicle credit
Biodiesel & renewable diesel fuels credit
Credit for increasing research
Energy efficient home credit
Investment credit
Renewable electricity credit
These are some of the categories to keep in mind for deductions when you begin operating your business. This list is not exclusive, and there are other businesses expenses that you may encounter. Remember, if it is a true business expense, it is probably deductible:
Rent or home office
Employee salaries and other compensations
Utilities
Advertising
Auto expenses
Travel
Entertainment (includes dining)
Professional fees
Business licenses, permits, memberships
Business supplies & equipment
Accountant & attorney fees
Educational expenses (related to business)
Repairs
Bad debts
Interest on business purchases
Moving expenses
Software
Postage
Parking fees & transportation
Taxes
For bookkeeping or accounting referrals, please contact Andrea Korogi at (760) 931-8400.
Whether you have a home based business or a business outside the home, you must keep good records to justify your deductions. Sandra Hunsicker, of Sandra Hunsicker Bookkeeping Services, says she finds that most small business people are good at understanding their business, but inefficient at keeping up on payables/receivables, postings, oversight of bills, profit and loss statements, etc. A bookkeeper, such as Hunsicker, will handle the daily or monthly bookkeeping tasks and present all the information needed to either hand to an accountant or allow you to do the taxes on your own.
Kim Fichera of Fichera & Company, CPA's, agrees.
"Preparing taxes goes so much quicker, if the business person keeps their books clean during the year". Fichera recommends that small business people who use Quik Books send their bookkeeping to their accountant occasionally during the year to determine if everything is on track and to avoid mistakes that will cost more later on.
Keep in mind, even your accountant may not know that you qualify for some of the new credits if they're not completely familiar with your business. Following are some of the tax changes for 2006 to keep in mind.
Self-employment tax – The maximum net self-employment earnings subject to the social security part of the self-employment tax increases to $94,200 for 2006.
Standard mileage rate – The standard mileage rate for the cost of operating your car, van, pickup, or panel truck in 2006 is 44.5 cents a mile for all business miles.
New and revised credits for 2005 and 2006:
Alcohol fuel credit
Alternative fuel vehicle refueling property credit
Alternative motor vehicle credit
Biodiesel & renewable diesel fuels credit
Credit for increasing research
Energy efficient home credit
Investment credit
Renewable electricity credit
These are some of the categories to keep in mind for deductions when you begin operating your business. This list is not exclusive, and there are other businesses expenses that you may encounter. Remember, if it is a true business expense, it is probably deductible:
Rent or home office
Employee salaries and other compensations
Utilities
Advertising
Auto expenses
Travel
Entertainment (includes dining)
Professional fees
Business licenses, permits, memberships
Business supplies & equipment
Accountant & attorney fees
Educational expenses (related to business)
Repairs
Bad debts
Interest on business purchases
Moving expenses
Software
Postage
Parking fees & transportation
Taxes
For bookkeeping or accounting referrals, please contact Andrea Korogi at (760) 931-8400.