Tell me, who does not want to work from the comfort of their couch at home, from a coworking space or from a cool café? Yet, as pleasant as freelancing may seem, it is a lot more challenging in fact. Not only do you have the burden of establishing your empire 🙂 you have the added load of tax preparation (which seems to be a hassle as well). To make it a bit easier for you, here is a practical tax preparation guide for entrepreneurs. We hope that this guide takes some burden off of your shoulders.
- Time your expenditures
Ending the year with good income could imply that you should satisfy your business equipment purchase needs by December 31. This would allow you to start depreciating it this tax year, which would enable you to take a tax deduction for it. Generally, capital expenditures are counted as made in the year you pay for them. This is applicable even when you use a credit card or other deferred payment plan, and you don’t pay for the expenditures until next year or the year after. Being on the cash basis of accounting can help you lower your tax bill like this.
- Keep your bank accounts separate
We cannot emphasize this pointer enough: no entrepreneur is 100 percent sure that their business will float when it firsts opens or not; however, that is no excuse to run your business from your personal bank account. You must get a separate business checking and savings account when you start a business. You must make sure business income and expenses go through the business account only. The business bank statements should reflect solely business expenses, and no personal charges or withdrawals should occur through them.
- Take a startup deduction
This is one of the most significant tips for filing company income taxes for artists. The expenses that you rack up while preparing to start a business can be conveniently employed as a tax deduction. You must make sure to take the appropriate, allowable deduction for startup and organization costs (to get geeky, under Section 195 of the Internal Revenue Code).
We hope that these tips help you wade through the process of tax preparation without any hassle!
Agro Accounting CPA 