Many business owners don’t know that there are several ways you can get tax breaks for their small businesses. Here are just a few of the tax breaks you may not know about. Talk to a CPA or tax lawyer to see if you qualify.
If you’ve ever looked closely at your utility bill, you’ll see that there you are paying taxes on all of your utilities. For a large store or office building, this amount can be quite significant. Certain businesses can receive an exemption or refund on this utility tax in Indiana. There are very specific guidelines to determine if you qualify, and these guidelines can vary depending on your industry. Because this exemption can get so complicated, you should seek a professional for advice on filing for this exemption.
Registering your business as an S corporation can go a long way towards saving you money on your small business’s taxes at the end of the year. Small-business owners who don’t register as an S corporation often have to pay a 15% self-employment tax on top of their standard tax rate; but if you get the S-corporation designation, you can be exempt from this additional tax.
Filing as an S corporation does require you to pay yourself a wage, even as the business owner. However, you are free to pick this wage yourself, and you can change it each year depending on how well the business does. It is a small price to pay to save 15% of your profits.
All of the paperwork to file as an S corporation can be found online, on the IRS website. However, these kinds of designations can get complicated, so you should talk to a CPA or other tax professional to ensure that you qualify to be an S corporation.
Home Office Deductions
Whether you work exclusively from home or you just have an office in your house where you occasionally meet with clients, you may qualify for a home office deduction through the IRS. Keep in mind that the IRS is very strict on how your office space is used; to qualify for the deduction, you must use your home office exclusively for business purposes. Engaging in any non-business activity in your home office can cause you to forfeit your eligibility for a home office deduction.
However, if you’re able to limit your activities in the office to only business-related activities, there are a lot of expenses that you can write off as business expenses:
Renovations to the office space
A percentage of your utility bill
A percentage of your homeowner’s insurance and property tax
There are a number of other expenses that you may be able to write off, but it’s important that you know what qualifies as a business expense. For this reason, you should speak to a tax professional any time you want to apply for the home office deduction. They will make sure that you qualify and that you maximize your return by writing off all qualifying expenses.
Running a small business is hard work, and it can be tough to make a profit. By cutting out expenses like self-employment tax and utility tax in Indiana, you can limit your spending and turn a bigger profit.