For assistance in identifying all the deductions to which you’re entitled, contact our office. We’re here to help you pay the lowest tax allowed by law.

Never try to use the IRS as your banker. When cash flow is tight, you may be tempted to pay your suppliers first and your payroll taxes last. The IRS will take steps to minimize the liability as quickly as possible. They also have a powerful weapon available to collect such taxes. Whether or not you own the company, you could be determined to be a “responsible person.” This means that the IRS can hold you personally liable to 100% of any payroll tax deficiency.

Deduct as much of your family health insurance premium as the law allows. The cost of health insurance paid by self-employed individuals for themselves and their dependent is deductible.

You are allowed to deduct the entire cost of certain depreciable equipment in the year it is purchased. Most business equipment is depreciated over five or seven years. However, small business are allowed what is referred to as a Section 179 deduction each year, with certain dollar limits. If your total equipment purchases exceed $200,000 for the year, the expensing option phases out.

If you conduct some or all of your business from your home, be aware of the home office deduction. Generally, a portion of the home must be used exclusively and regularly for business in order to allow a deduction as a home office. A home office can qualify as a “principal place of business” even when it is just used by the taxpayer for administrative or management activities of the business, as long as there is no other fixed location to conduct these activities.

To qualify for a business deduction, that portion used for business can’t also be used for any personal activity.

If your federal tax deposits exceed certain annual limits, you will be required to make them via the Electronic Federal Tax Payment System (EFTPS). Because the amount of your deposits can vary, we suggest that you keep in touch with us to determine your depositing requirements.

Some business find the electronic system (EFTPS) handy and opt to use it even though they are not required to do so. The system is easy to use by telephone, by personal computer (PC), or through a financial institution.