What Deductions Can I Take?
Keep every receipt throughout the year, even if you just stuff it in a shoebox only to sort through it at tax season to see what qualifies as a deduction. A lot of business expense categories are quite broad, so there are many legitimate expenses you may forget about if you don't keep receipts.
Business owners may be concerned about taking a home-office deduction because they're afraid of being audited, but Weltman said that if your business really is located in your home, you're entitled to the deduction, "so take it."
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The laws have changed for a number of common deductions. For example, the standard mileage rate in 2007 was 48.5 cents per mile, and in 2008 it was 50.5 cents for the first half of the year and 58.5 cents for the second half. Also, in 2008 businesses could take a bonus depreciation expense of up to 50% of the cost of newly acquired fixed assets. That provision has been extended for assets placed in service in 2009.
In addition, Section 179 now lets companies expense up to $250,000 in the first year that qualifying property is placed in service. Prior to passage of this stimulus bill, it was set at $133,000.
Getting Your Duckets In A Row
April 15 may be almost two months away, but that doesn't mean you can procrastinate. Get your paperwork together now so you can track down anything that's missing. You'll need W-2s, 1099s, perhaps Schedule K-1s (if there are two or more owners in your LLC).
Weltman recommended not filing by April 15 if you don't have all your paperwork yet -- rather, take advantage of the six-month extension. However, she warned that just because you file an extension, don't think you don't have to pay your taxes -- you rack up interest and penalties if you pay after the April 15 deadline.
Once you're ready to file your taxes, you have a few options. You can opt for the traditional appointment with a licensed tax professional, you can take a gander and do them yourself, or you can electronically file. The last has its pros and cons, pros including that if you're entitled to a refund, you'll get it much quicker, said Weltman. And e-filing usually eliminates any mathematical errors, she added, since the return gets "scrubbed." Then again, a huge con of e-filing is that you potentially put you and your business at risk of identity theft.
Next Page: How To Avoid An Audit
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