It’s too late to try to save on your 2009 taxes, but it’s not too early to start planning your 2010 tax strategy. What can a small business owner do to save on taxes in 2010?
- Find every legal way to reduce your taxable income. Start an HSA plan for your medical expenses. Make charitable donations. Max-out your retirement plan contributions.
- Find an advisor. Whether it’s your existing CPA or a local Enrolled Agent (“EA”) like yours truly, find someone who will give you a one-hour consultation on ideas for saving on your taxes. These tax pros live and breathe this stuff and might know about tax deductions or credits that you’re missing.
- Save for your quarterly estimates and pay them on time! If you’re paying self-employment tax on your business income, it would be a safe bet that 25% of your profits are going to go to taxes at a bare minimum. So start setting aside that much each time you get a big check or monthly, at least. Then you’ll have the money ready when it’s time to send in those quarterly estimate payments.
- Keep track of your expenses. Save those receipts, keep a mileage log, and claim every deduction you’re entitled to. If you think it’s not worth getting a receipt for that $2 parking fee, just remember that saving one of those receipts each week will net you an additional $104 in business deductions by the end of the year … saving you up to $40 in taxes!
Being prepared and maintaining good recordkeeping habits is your best defense against the tax man!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.
