Fund your small business like a bank and avoid lost deductions.
If you need to infuse capital from your personal accounts to the business, develop a loan structure that benefits both you and the business. It is much easier to track and take advantage of interest if you set up loans with repayment schedules that include interest. The beauty of this method is you can set up a payment schedule that doesn’t handicap your growing business while being paid interest that generally gets lost on credit cards. Make sure the interest is realistic and the re-payment schedule is consistent, besides being something the business can afford.
Pay for legitimate expenses right away to avoid scrutiny. Your new business can’t always pay for all the expenses at the beginning, but for tax purposes consistency is important. If you use your car, cell phone, home office or anything else for business, it is best to have the company pay for these expenses right off the bat. Not only will this help you determine the true financial picture of your company, it will also make more sense to the government, should an audit come down the pike in the future.
For guidance on what deductions can be claimed for your small business, look no further than the government. The IRS.gov and SBA.gov have plenty of information to guide you on deducting and capitalizing expenses enabling you to understand now what expenses can be deducted.
Avoid end-of-the-year headaches.There are many deductions available to small businesses that can be realized at the end of the year, but the more you pay for things right away, the easier your tax prep will be. Understand your business, the expenses that you have that can be deducted and start paying for them right away.
Most expenses like rent from your home/office, utilities, phones and even auto expenses can be set up as monthly payments. It’s simply converting your deductions into expenses that ultimately legitimize your business and avoid scrambling at the end of the year and even IRS scrutiny.