Tax tips for small business owners – Small Business Corner

Year-end is always an important time for tax planning, especially this year. The pandemic has created historic disruption and challenges for small business owners. To help you navigate this different year in terms of taxes, we put together some tips to be aware of as you get into your year-end tax planning mode. After all, small businesses can use all the savings they can get—and that includes on their taxes.

Understand the CARES Act

The CARES Act created the Paycheck Protection Program (PPP), which authorized small businesses loans to cover employee salaries and certain other expenses due to Covid-19. Assuming certain conditions are met, small businesses can apply to have those loans forgiven. You should consult with your tax advisor to learn more about this and other important tax issues raised by PPP loans.

Home Office Deduction

Take advantage of the Home Office Deduction. The Home Office Deduction is for those that rent or own your home and use part of the property for business. You may be able to deduct business expenses associated with your office space such as rent, mortgage interest, property taxes, and utilities.

If you are one of the millions of business owners, freelancers, and independent contractors now working from home to stay safe and maintain social distancing, you will want to become familiar with this deduction.

Charity

If you are considering a donation to a charity, as an individual or a business, be sure you can claim the deduction.  You can collect a tax break for it but be sure to review your giving strategy with your tax advisor before making any big charity decisions.

Make major business purchases before Dec. 31

If you are planning on making any purchases of equipment or machinery for your small business, you should make those purchases and place the item into service before Dec. 31.

This will allow you to get a deduction of 100 percent of the cost of the items for 2020. Purchases include computers, office furniture like chairs and desks, some vehicles, and other equipment used for your small business.

2020 has been a challenging year, but you don’t want to delay these important year-end tax planning considerations. We hope these tips help you to save money and maximize credits and deductions!

We hope you find these tips helpful!

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