Overview Of The Almighty Tax Deduction For Small Businesses

Overview Of The Almighty Tax Deduction For Small Businesses

Overview of​ the​ Almighty Tax Deduction for Small Businesses
Taxes are the​ great bane of​ most businesses .​
Alas,​ tax deductions act as​ a​ salve to​ cool the​ burning and itching of​ your bank account .​
Overview of​ the​ Almighty Tax Deduction for Small Businesses
The tax system in​ the​ United States is​ an​ undeniable mess .​
With tens of​ thousands of​ pages of​ laws and regulations,​ the​ phrase cruel and unusual comes to​ mind when it​ is​ time to​ pay your taxes .​
President Jimmy Carter called the​ system a​ disgrace to​ the​ human race .​
Albert Einstein said the​ tax system was the​ hardest thing to​ understand in​ the​ world,​ much harder than physics .​
The system is​ such a​ mess,​ that some large corporations file one tax form every four minutes! the​ only way to​ fight the​ good fight against taxes is​ to​ understand and maximize deductions .​
Business taxes can be summarized simply as​ calculating your total revenue,​ reducing this amount by as​ many deductions as​ you​ can and then paying tax on​ the​ remaining amount .​
Obviously,​ this represents a​ major simplification,​ but I​ offer it​ highlight the​ importance of​ deductions .​
They act as​ your lifesaver when you​ are floating in​ the​ ocean of​ tax codes and regulations .​
Most people get caught up in​ the​ finite issues of​ tax deductions and miss out on​ deductions .​
To this end,​ it​ is​ important to​ understand the​ theme for deductions for small businesses .​
When considering whether an​ expense is​ a​ deduction,​ you​ should ask yourself the​ following:
1 .​
Did it​ occur as​ part of​ my small business?
2 .​
Was it​ an​ ordinary expense associated with my business?
3 .​
Was it​ a​ necessary expense?
Many people ask for a​ more specific of​ an​ ordinary expense .​
Alas,​ the​ tax code is​ vague,​ but this typically means an​ expense that another business in​ your industry would also claim .​
Admittedly,​ it​ is​ a​ vague term,​ but you​ will just have to​ determine how comfortable you​ are with claiming the​ deduction .​
The second area people get confused with is​ the​ necessary element of​ the​ test .​
Alas,​ the​ IRS has been kind enough to​ help us out here .​
a​ necessary expense is​ one integral to​ the​ development and maintenance of​ your business .​
Okay,​ the​ IRS hasn’t helped much,​ but it​ is​ a​ guideline of​ sorts .​
In many situations,​ small businesses can be fairly aggressive with their deduction claims .​
If audited,​ it​ important that you​ be able to​ state why a​ claimed deduction is​ an​ ordinary and necessary expense of​ your business .​
While obvious deduction such as​ business cards can be claimed,​ these vague definitions give you​ lots of​ wiggle room in​ other areas .​
How aggressive should you​ be in​ claiming tax deductions? It really depends on​ your comfort level .​
The more aggressive you​ are,​ the​ more you​ should consider getting some professional CPA help to​ back up your claims.

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