Monthly Archives

October 2015

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7 Tax Saving Strategies for Home-Based Businesses

By | Advice | No Comments

With approximately one-third of taxpayers purported to wait until the last 30 days leading up to filing deadline, there is egregious opportunity loss with respect to potential tax savings were strategy to be employed all year through. Sadly, many home-based business owners are serial “late filers” and miss out on maximizing tax benefits that are unique to their type of business structure. In fact, most have no idea there are home-based business tax professionals that exclusively focus on strategy for this niche who can help these entrepreneurs realize tremendous tax advantages.

With this in mind, Meisa Bonelli, Managing Partner of Millennial Tax—the leading provider of tax services for home-based businesses and solopreneurs, offers these 7 tax saving strategies a home-based business owner should heed:

1) Get a Home Based-Business Tax Professional
If you would go to an optometrist for your eyes and a podiatrist for your feet, why wouldn’t you seek out a tax professional that understands the intricacies of your type of business? Choosing a specialized tax professional can save you thousands of dollars (in missed deductions) and time (trying to learn pertinent IRS regulations). Do-It-Yourself software can’t do it all and software is only as good as the person using it. If you’re in business, leave maximizing your savings to professionals that can help you.

2) Choose the Right Entity for Your Business
Per the Global Entrepreneur Monitor Report, 69% of all start-ups in the United States are home-based businesses and 59% of established businesses more than three and a half years old continue to operate as home-based businesses. If you’ve decided to start a business or maybe you have been running one for a while, then become official. Let your county, state, and the federal government know that you’re in business by registering your business within your state under the entity type that best suits your business goals. Remember, there isn’t a one-size fits all for home-based businesses, so make sure to consult with your tax professional or an attorney about the best business entity for you.

3) Audit Proof Your Business
Audit proofing your business means more than just saving your receipts. Depending on the type of home-based business you operate, you may need to keep calendars, mileage, and personal use logs. All home-based businesses aren’t created equal, so speak with your tax professional about what you can do to make your business in particular tax compliant.

4) Get a Second Look
In 2012 (for the 2011 filing year), nearly a quarter of a million individual business returns not claiming the Earned Income Tax Credit (excluding farm returns) were examined by the IRS and assessed additional taxes to pay after review. Many tax professionals offer complimentary consultations regarding their services and will take a look at your prior year’s returns. If the IRS is going to make sure they don’t miss a dime, then you should make sure you don’t miss a deduction.

5) Tax Planning is Year-Round
If your business isn’t seasonal, then you need a year round tax plan, strategy, and procedures not to mention a professional that’s available. When you have a simple tax situation, it is okay to check on your taxes once a year if not much has changed in a year (e.g. purchasing a home). However, if you’re running a business, the tax implications of your business’ decisions are a 365-day consideration.

6) Start a Retirement Plan
The government makes it very advantageous for home-based business owners and solopreneurs to save for retirement. Even if you’re just starting out, planning for your future is one of the best savings strategies. Take full advantage of the plan that best suits you and your long-term goals.

7) Have Integrity
It’s not a deduction you’ll find in an IRS publication, but running your business on the up-and-up is good for your bottom-line. Tax fines and penalties for not running your home-based business like a real business are stiff! Seek out the information you need to operate a successful home-based business and consistently follow the appropriate rules and regulations.

Sources:

69 Percent of U.S. Entrepreneurs Start Their Businesses at Home


Internal Revenue Service Data Book, 2012, “Examination Coverage: Recommended and Average Recommended Additional Tax After Examination by Type and Size of Return, Fiscal Year 2012” – Page 22

Photo credit – Lisa Ramsay Photography

Stop the Procrastination Foolery

Stop the Procrastination Foolery

By | Taxes | No Comments

For a small business owner, waiting until the last minute to file your taxes sets your business up for the possibility of gross error.  When you’re pressed for time, you’re likely to miss things, including necessary documentation your tax professional needs to capture all of your deductions.  Even more important, you’re more likely to make mistakes that could either cost you your refund or worse, result in owing Uncle Sam.

The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month a tax return is late.  That penalty starts accruing the day after the tax filing due date (IRS Facts on Filing Late). According to the IRS, “If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.”

Walking into your tax professional’s office after April 1st is like showing up to participate in a triathlon and you haven’t trained at all leading up to it.  You’re not going to be prepared and your performance is not going to be pretty. Avoid this all-too-common nightmare by reaching out to your tax professional today.  If your tax situation hasn’t changed from the prior year, it will be a breeze letting your tax professional know that things will be relatively similar.  However, if things have changed for you personally or for your business, it would be ideal to afford yourself the time to discuss these changes with your tax professional.

If you’re unable to file your tax return on time, absolutely file an extension.  Filing an extension will not help you avoid penalties or interest if it’s determined that you owe, but it will help you avoid the late filing penalty and give you more time  to get your ducks in a row.  For taxpayers with due dates of March 15th and April 15th, filing an extension will allow you until September 15th and October 15th respectively, to file your return.  However, for next year, planning ahead to file your taxes will save you money, time and a headache.

Photo credit – sodahead.com

Online Entrepreneurship Classes

Superstar Reality Distortion

By | Entrepreneurship | No Comments

Being a successful visionary entrepreneur takes a great deal of bravado, charisma and “asshole disregard.”  In Walter Isaacson’s extensive biography of Steve Jobs, we learn that Jobs changes circumstances to suit him, influence the minds around him, an industry and effectually the world by being focused, persistent, opinionated and a prick.  Really, the other side of the coin could be that he held people to their higher self and saw that higher self in himself and the products he created.  The fact of the matter is the Steve Jobs personalities of the world are anomalies and when an entrepreneur is willful enough to see things different, that comes at a cost — one being a rough management style, which really isn’t a management style at all.

If we didn’t have unrealistic, idealistic maniacs, the world would be carless, light-bulbless and minus an even better way to deal with child leukemia and chemotherapy.  Thank you Henry Ford, Albert Einstein and Emil J. Freireich.  ‘“When Henry Ford decided to produce his famous V-8 motor, he chose to build an engine with the entire eight cylinders cast in one block, and instructed his engineers to produce a design for the engine.  The design was placed on paper, but the engineers agreed, to a man, that it was simply impossible to cast an eight-cylinder engine-block in one piece.” Ford replied, ”Produce it anyway,” Napoleon Hill, Think and Grow Rich.

While an entrepreneur superstar can get phenomenal things done incredibly fast in the short-run, many times, that superstar doesn’t understand group dynamics, and as a consequence, struggles to be an effective leader.  A superstar entrepreneur can often do the work of four people which is a  great asset, but if the superstar won’t humble themselves and play nice, then a company runs the risk of being too dependent upon the superstar.  Should the company lose the superstar, could be a disaster.  Additionally, a superstar who can’t stop being a diva can eventually destroy a company’s culture, or in the case of Steve Jobs, create a tribe by being unreasonable.  The fact of the matter is, rational, practical, ‘play nicely’ leadership is not hard to come by, but an entrepreneur that can distort reality to their will and keep investors and the world engaged are so few and far between that we have to embrace ridiculousness.

Can’t wait to see the Steve Jobs film this weekend — Tribe “Ridiculous #Entrepreneurs” unite.

Photo credit – Hypable.com/Andrew Sims