David NilssenAs “chief cook and bottle washer,” America’s small business owner has enough on its plate. Tax time only increases the workload as many frantically pull together their financial records so that they can maximize their deductions. While I’m not a tax professional (this is my disclaimer that this is for educational purposes and to not misconstrue this as advice) my company has worked with over 8,000 entrepreneurs and I’ve noticed common mistakes that many small business owners make in regards to their financials.
Here are just a few of my observations:
Don’t save money on a bookkeeper. Bookkeeping is CHEAP–and utterly important to your business being able to maximize its deductions, secure capital, analyze financial trends, control costs and more.
Do keep your receipts from networking. Entrepreneurs often do not track (or even expense) after-hour networking costs. Most business meals, cocktail and events are tax deductable.
Don’t combine your personal and business accounts. Treat them separately at all times—cross pollination just makes things messy. Many small business owners use personal credit cards at first but, there should be no need. If you have a credit card in good standing simply call the company and request one for your business. It’s that simple!
Do invest in your professional development. You can generally deduct the cost of seminars and other educational curriculum as long as it has clear application to your business or you as a leader.
Don’t forget to track your mileage! At 56.5 cents per mile, the mileage deduction could make sense if you have a lot of appointments outside of the home office. There are even mobile apps that can help you track your business mileage and save time.
Do consider the positives of having employee benefits like a 401(k). This can help you defer taxes, increase your retirement savings and help with employee retention.
At tax time, just remember to take deep breaths, stay organized and enjoy the fact that after April 15th, you won’t have to think about all of this for another year.
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