If you are a business owner, you will probably agree with the statement that one of the hardest parts in running business is to separate your business and real-life finances. Another difficult part is to figure out which types of tax deductions are available both for personal life and business-related expenses.
One of the key points which can help you solve this problem, is to separate your business finances from your personal ones. It will also help you avoid any possible issues when the IRS knocks on your office door with an audit!
Another action that you have to implement is to open up separate bank accounts both for personal and business use. Then, you should get a business credit card in order to keep your business transactions separately. You should also avoid making any personal purchases with your business card, since it is going to bring some confusion when it comes to annual reports.
Stop Wasting Your Airlines Miles on Business Travel
Most entrepreneurs prefer to use their personal stash of miles in order to cover the cost of business travel. Little do they know, that travelling is tax deductible as a business expense. Thus, you can use your business card, deduct all your travel expenses, and save your personal miles for your future trips!
Do Not Confuse Business and Fun!
There are many cases when the business owners deduct the entertaining costs of their clients as business expenses. As a rule, it includes both meal and entertainment costs. If you are responsible for your client’s entrainment programs, then try to ensure that you have all the receipts at hand in case if you are intended to deduct that costs as business expense. You never know when the IRS can ask you for more details!
Personal Tax Deductions That Every Tax Payer Should be Aware of
Unfortunately, in most cases, a small business owner pays more attention to their business, and does not pay due attention to vital aspects like personal accounting. However, accounting can have a tremendous impact on the business owner’s life. For example, not many people know that there are a big number of personal tax deductions that you are eligible to claim. The basic principle of claiming for any type of tax deductions is: the more you deduct, the less you pay in taxes.
Among the most common types of deductions are:
- Student Loan Interest Deduction
- Charitable Donations Deduction
- Medical Expenses Deduction
- Deduction for State and Local Taxes
- Gambling Loss Deduction
- Mortgage Interest Deduction
- Health Savings Account Contributions Deduction
If you are a business owner, then you should clearly understand that it is better to keep your business’ finances separately from your personal ones, since their combination always injects confusion in your business. So, if you need consultation on how to separate your finances from each other, Prestige Auditors are open to provide you with the consultation you require. Furthermore, we can help you choose and claim all the available types of deductions, and reduce the final amount of your taxes, among many other tax-related services.