Salt Lake City, UT (Vocus) June 22, 2010
When it comes to taxes, most small business owners either hire an accountant or try to do it themselves. In either case, they rarely get the refund they could have and deserve, if they understood a few simple tax laws and deductions.
For most entrepreneurs every penny counts. Most businesses can’t hire an internal accountant to help structure and document business expenses. Pocketbook Professor helps these businesses by offering tax advice and other business training tools.
We have selected only 5 tax saving tips, of the hundreds they offer on their website, that most business owners miss. As always, readers should remember that every situation and business is different. Business owners should continue to talk to their accountant about each of these suggestions before deducting them, to make sure their situation qualifies.
1. Business owners can deduct the equivalent of their child’s education and wedding. Normally the cost of college tuition and the cost of weddings are not deductible. However, if the owner hires their children and pays them a reasonable wage, then those wages paid to the “assistants” for business duties are deductible, up to a certain amount per year.
2. Business owners can deduct up to 50% of their fun, such as cost of plays, movies, football tickets etc., if incurred for legitimate entertainment related to growing the business (i.e. entertaining potential clients).
3. Consider converting IRAs, simple IRAs and even 401K to a Roth IRA. Although this will be a taxable event for the conversion, these taxes can be paid over the next two years. More importantly, the Roth IRA will be tax free for the rest of your life! And if your family inherits the Roth balance, they could receive the money tax free! You will go from having a fully taxable account to being tax free forever. This is a great time to convert since taxes will probably be going way up as a result of our 12 trillion dollar deficit.
4. A recent article in USA Today said that healthcare costs are expected to increase 9% next year. Save money by deducting all your family’s medical expenses with no thresholds or restrictions including dental expenses, braces, eye glasses and eye surgery, deductibles and co-insurance, mileage to and from the doctor, preexisting conditions and more! To do this you need to set up a “Self-Insured Medical Reimbursement Plan.” This is a written plan that agrees to pay for 100% of all medical costs of employees and their families. If you then hire your spouse then you and the kids can all be covered for expenses not covered by insurance!
5. Check for carryovers from prior returns: There are many types of deductions that get carried over to future years because they can’t be used for some reason in the year that you incurred them. A good example would be capital loss carryovers, and business losses that can be carried over for up to twenty years.
About Pocketbook Professor
Pocketbook Professor is a Salt Lake City, UT based company dedicated to saving small business owners money on their small business taxes. Sandy Botkin, co-founder of Pocketbook Professor started the company to help small business owners keep more of the money they earn. Business owners are busy trying to make their business profitable and need access to easy-to-understand tax advice at a reasonable price so that they can be more efficient when they do talk to their accountants on billable time. Pocketbook Professor provides hundreds of easy to understand lessons on its website. For more information please visit http://www.pocketbookprofessor.com .