If you are small-business owner or self-employed, there are a number of special tax credits and deductions that you qualify for. However, if you don’t know to take advantage of them, you could be missing out on major tax savings.
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GOBankingRates spoke with Ismail Mohamed, a TurboTax expert and CPA, to get his top tax tips for entrepreneurs and other self-employed individuals, including the credits and deductions they need to know about.
Many of the expenses you pay to keep your business going on the day to day can be deducted if you are a small-business owner or self-employed.
“Self-employed individuals can deduct a wide variety of business-related expenses, including home office costs, business travel and equipment,” Mohamed said. “Be sure to keep detailed records and receipts, as these deductions can reduce your overall taxable income.”
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Section 179 provides a major tax benefit you might not know about.
“Section 179 of the tax code allows businesses to deduct the full purchase price of qualifying equipment and software, up to a certain limit, in the year it was placed in service, rather than depreciating it over time,” Mohamed said. “This can be a significant tax benefit for small businesses, allowing for immediate expensing and reduced taxable income.”
To make tax filing season more efficient, it’s essential to keep your personal finance accounts and business accounts separate.
“Maintaining a clear separation between business and personal finances is very important,” Mohamed said. “Open a separate bank account and use a dedicated credit card for business expenses. This makes tracking income and expenses much easier, simplifies tax preparation and provides a clear audit trail. Mixing funds can lead to complications and potential issues with the IRS.”
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This article originally appeared on GOBankingRates.com: I’m an Accountant: These Are the Tax Tips You Need To Know If You’re Self-Employed
