Tax Preparation Tips for Small Business Owners

Tax Preparation Tips for Small Business Owners

Most Americans mistakenly believe that corporations create most of the new jobs in the country. It’s not their fault, of course. Big companies have smiling spokespeople who heap fulsome praise on their benefactors anytime they add to their workforce. But the truth is that small businesses have created nearly two-thirds of new jobs over the past 15 years, according to the U.S. Office of Advocacy.

Unfortunately, small businesses have not received the same incentives and tax breaks that Washington customarily extends to corporations. After all, they don’t have lobbyists and representatives pleading their case to elected officials. Due in no small part to the Great Recession, politicians have finally gotten the message that they must protect and encourage small business growth if they hope to stimulate the economy.

Recent Deductions

The Small Business Jobs Act and the Affordable Care Act offer substantial deductions and credits for capital investments and health insurance bills. According to the law, any small business owner who employs fewer than ten full-time workers can claim the maximum tax credit to help them cover health insurance premiums- currently a refund of about 35 percent. It is important to note that the fewer workers a company employs, the more deductions its owner can claim.

Tax deductions are particularly attractive for the self-employed individual who works alone. They can now subtract the cost of their health insurance from their business profits and self-employment taxes. These simple credits have encouraged thousands of ambitious people to take the risk of opening their own companies. With lower debts and greater government incentives, small firms should lead the way as the economy continues to recover from the global recession.

Contact a Tax Preparation Professional

Many of the new programs and provisions that owners can benefit from are a bit wonky. There is, for example, the Section 179 provision, which lets companies write off the cost of all qualifying equipment and computer software that was made in certain years. As we said, it can be a bit technical, which is why it is probably a good idea to hire a tax preparation professional to explain it all to you.

How Can They Help?

Even though the government is offering small firms more than it has in a long time, there are strings attached. We know, for instance, that IRS agents are cracking down on business owners because the IRS audit rate for them is at its highest level in the past decade. So, if you are going to take advantage of these helpful programs, make sure you do it correctly. A tax professional can help you fill out all the forms and make certain you’ve followed the rules set down by the IRS.

With the help of a trusted tax preparation professional, you can claim all the credits you are entitled to.