|Are you flushing your profits?
Are you currently tracking your vehicle mileage? At tax time do you scramble to identify business miles because you dropped the ball documenting your mileage throughout the year? Are you forgoing the mileage deduction entirely because it is too much trouble?
You may be relinquishing thousands of dollars unnecessarily to the IRS if you aren't tracking and claiming your business related mileage. Seventy percent of all small businesses fail within 10 years and 36% fail within the first two years in a stable economy. In tumultuous economic periods the survivors are those at the top of their game and businesses that use every dollar efficiently and effectively.
I am the quintessential multi-tasker always working to find the perfect balance between family and work. Time consuming tedious tasks like documenting mileage is not only irritating but also futile. Every year I find myself at tax time spending hours attempting to create accurate after-the-fact mileage records with my calendar and mapquest. Every year numerous miles have gone unclaimed from last minute meetings and trips that never made it on my calendar. I have traveled in excess of 10,000 business miles this year. That equates to a tax deduction of over $5,500 which creates as much as $2,500 in savings. With the current mileage deduction at $.55 a mile the undocumented miles can make a significant difference.
Fortunately, a great technological discovery has simplified my life and will save me an abundance of time and money this year. Whether you use a Blackberry, IPhone or no data phone at all there is a reasonably priced application or device available to track the mileage for you. It's a simple as click and go. As a new Blackberry user this year, I discovered the "Mileage Genie" application for Blackberry. It interacts directly with the built in GPS. You click it on when you begin your business trip and off when it ends. Periodically you email yourself a report directly from the application that provides all the details required by the IRS and more. It also provides time tracking for client billing. As an added function, MyMileageGenie offers a straightforward and low-cost location tracking function. When turned on, the application sends out an E-mail containing the current location of the user to one or multiple E-mail addresses. The time interval that E-mails are sent at is configurable to the minute. Use the links in the left column to select and explore the application the works with your device. If you don't use a blackberry or IPhone check out the mtrackergps. The mtracker is more costly but definitely worth the money in efficiency and time savings if you travel for business and networking.
Top 10 Small Business Tax Deductions
- Start-up Cost Deductions - You can deduct up to $5,000 in start up and $5,000 in organizational costs for the first year of business.
- Education Deduction - You can deduct employee educational expenses incurred to maintain or improve job related skills. See IRS Publication 970 or talk with your tax adviser about the guidelines.
- Vehicle Deductions - You can deduct vehicle expenses either by the mile or for actual expenses. Meticulous recording keeping is critical. If you use your personal vehicle on the job, keep careful records about where you went and the nature of your business.
- Equipment Deductions - Section 179 is a key incentive in regards to business spending. Last year, Section 179 got a major facelift from the Economic Stimulus Act of 2008. In 2009, section 179 will allow you to deduct from your tax liability the full purchase price of equipment purchases up to $250,000. It also allows for a first year 50% bonus depreciation for any over-limit equipment. This means substantial, immediate tax relief for your business, and makes financing needed equipment a smart financial move. Section 179 can actually make buying new equipment profitable for the tax year. This is because savings often exceed the first years payments. There is no guarantee these limits will be renewed. If you want to take advantage of Section 179, now is the time to act and make your new equipment purchases by December 31st.
- Entertainment Deductions - You can deduct up to 50% of meal and entertainment expenses. The rules and limitations are somewhat complicated so be sure you consult your tax adviser or review the IRS rules at http://tiny.cc/31Kux.
- Travel Deductions - Transportation, (such as airfare) lodging and even dry cleaning can be deducted, and half of any business meals. You also can deduct expenses for business associates traveling with you. You can't write off expenses for family members or friends if they accompany you, unless they are employees and are professionally involved in the business end of the trip. The IRS recommends keeping a log of your expenses and receipts.
- Software Deductions - Software normally must be written off over three years because it will serve your business for more than one year. Section 179, however, allows small businesses to fully deduct off-the-shelf software the year it is purchased, as long as it is used the same year.
- Charitable Deductions -Charitable donations are a great way to get even more deductions on your tax return this year. You are able to deduct items you donated at fair market value on your tax return. This will eliminate your tax liability dollar for dollar. In order to follow all IRS guideline you must do the following when donating: itemize all items donated; donate to a legitimate charity; and obtain a receipt from the charity.
- Advertising Deductions - Advertising and promotions directly related to your business are deductible as miscellaneous expenses. See Publication 535 to write off advertising and other costs.
- Legal & Professional Fees Deductions - Accountant and attorney fees are deductible as business expenses.
Personalized services designed to meet your needs and budget.
Call us today for your free consultation
Do what you do best~Outsource the rest!