US Tax Checklist for Business Owners: Throughout the Year (Part 1) — More With Money (2024)

FAQs

How to maximize tax deductions for LLC? ›

Other ways to reduce LLC taxes include putting money away in a retirement account, deducting health insurance premiums and, if eligible, taking the QBI deduction for service-oriented businesses.

According to the Internal Revenue Service (IRS), business expenses are ordinary and necessary costs incurred to operate your business. Examples include inventory, payroll and rent. Fixed expenses are regular and don't change much — things like rent and insurance.

As a self-employed individual, generally you are required to file an annual income tax return and pay estimated taxes quarterly. Self-employed individuals generally must pay self-employment (SE) tax as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves.

Yes, you can write off the interest on a car loan if it's used for business purposes. You'll need to use the actual expense method to deduct this expense and you can only write off the business use portion of the interest. Also, keep in mind that your principal payments aren't deductible.

Office equipment, such as computers, printers and scanners are 100 percent deductible. Business travel and its associated costs, like car rentals, hotels, etc. is 100 percent deductible. Gifts to clients and employees are 100 percent deductible, up to $25 per person per year.

Whether you're already operating a business or simply launching a new venture, there are a few key benefits to officially starting your company in January. In addition to the legal protection that registering as an LLC or corporation provides, filing in January can help to simplify your taxes for the coming year.

Tax obligations vary from one business to another, but a good rule of thumb is to save 30% to 40% of your business income for taxes. This should ensure that you have enough to cover your quarterly taxes. You can work with your accountant to determine if you need to save more or if you can get away with saving less.

Forming an S corporation or electing for an LLC to be taxed as an S corporation may help a business owner save on self-employment taxes. An S corporation generally cannot have more than 100 shareholders, must have only one class of stock and can only have U.S. residents and certain trusts as shareholders.

Personal expenses

That might include the cost of haircuts and grooming or of your work attire (with the exception of specific branded uniforms or safety wear). Your personal cell phone, home improvements unrelated to business, groceries, and household supplies are also non-deductible expenses.

Does IRS ask for proof of business expenses? ›

You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.

There are other expense types that are not business deductible, such as lobbying, political donations, and, of course, any illegal activity. Most other costs are deductible.

You must file a return if you earn $400 or more in net earnings from your business. Net earnings equal taxable business income minus allowable business deductions.

If you open a company in the US, you'll have to pay business taxes. Getting a refund is possible if your business loses money. However, if your business has what is classified as an extraordinary loss, you could even get a refund for all or part of your tax liabilities from the previous year.

This being said, how long can a small business go without filing taxes? In most cases, a small business with no employees and has filed income tax returns in the past must file its annual return within three years of the original due date.

If the LLC has just one member, that owner can choose to be taxed as either a disregarded entity ( and pay business tax on their individual return) or an S Corporation to avoid double taxation. If it has multiple members, it can choose either partnership or S corporation taxation.

The key concept associated with the taxation of an LLC is pass-through. This describes the way the LLC's earnings can be passed straight through to the owner or owners, without having to pay corporate federal income taxes first. Sole proprietorships and partnerships also pay taxes as pass-through entities.

Possible expenses include services such as marketing consultants, labor force training, travel, and advertising. Organizing the business. If your LLC has at least two members then you can deduct these expenses related to organizing your business, such as the legal services and state fees involved in forming the LLC.

Yes, single-member LLCs can write off a variety of business expenses. This includes some startup costs, home office expenses, business and health insurance premiums, and other business-related expenses.