When tax deadlines approach, it’s easy for any small business owner to get anxious and overlook money-saving opportunities. But even with this pressing deadline, there are still a few last-minute steps you can take before you file your taxes. Here are five tips you can leverage:
1. Contribute to your retirement
You have until the tax deadline to open up a traditional IRA or Roth IRA and put money towards that account for it to count for the tax year you are filing for that year. For your 2017 taxes, that means you’ll have until April 17th, 2018 to get this done. You get to take advantage of not only reducing the amount of taxes you owe but you can also save for your future retirement, too.
2. Deduct traveling expenses
Travel expenses are crucial for independent contractors or for those who work in the field, such as HVAC contractors or a field service technician, because you frequently use your vehicle to travel between appointments at field service customers’ homes. Consider deducting either the actual expenses for your vehicle, such as repairs and insurance, or taking the mileage rate deduction. The mileage rate deduction is a standard deduction, so make sure you calculate your actual expenses to see which option is most beneficial.
3. Double check your taxes before filing
Thoroughly review your taxes before submitting them, so you don’t miss important deductions or money-saving opportunities. Double check your taxes for deductions that are easily overlooked, such as the home office deduction, deductions for used or new business equipment the year you start your business, or carryovers. If you also need more time, consider filing an extension. Just remember that filing an extension only extends your tax deadline but not your payment.
4. Track your receipts and expenses
When you’re out in the field or providing a home service, there are still extra out-of-pocket expenses you’ll have to cover, including fuel for your equipment or supplies. You may be able to deduct these expenses, so it’s important to track them. Consider also leveraging field service software, such as mHelpDesk, to easily reference expenses, such as unpaid invoices or car fleet costs.
5. Keep your equipment
Ordinary losses are completely tax-deductible, so keeping old equipment may provide tax savings. Verify if your equipment qualifies as a depreciable business property under Section 1231, and do the math to determine if it’s worth counting as an ordinary loss versus selling it as a capital loss.
While the tax deadline approaches, you still can take action to ensure you maximize your savings. By using these best practices, you can file your taxes with peace of mind.
As a field service business owner, do you have any tips of your own to share? Tell us below!
Last modified: March 29, 2018