Slideshow 7 tax-saving tips for small and home-based businesses

Published
  • March 13 2014, 2:19pm EDT
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1. Register your business

If you decided to start a business from your home — as 69% of all start-ups do, according to the Global Entrepreneur Monitor Report — then become official. Bonelli says that registering your business with the county, state and federal governments under the proper entity for your business goals is an important step in saving on taxes.

2. Make your company audit-proof

This means more than just saving receipts, Bonelli says. You should keep calendars, mileage and personal-use logs, for starters. Talk to a tax professional about even more compliance-ready tactics that fit your particular business model.

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3. Make sure your accountant is a specialist

If you go to a tax professional who specializes in home-based businesses, you could save thousands of dollars in deductions and time, because they already know the most pertinent IRS regulations. Software is only as good as the person using it, says Bonelli, so beware of the do-it-yourself option.

4. Get a second opinion

“If the IRS is going to make sure they don’t miss a dime, then you should make sure you don’t miss a deduction,” Bonelli says. Many accountants will offer complimentary consultations on your past year tax returns so you can be sure nothing was overlooked.

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5. Tax planning is a year-round venture

“If you’re running a business, the tax implications of your business decisions are a 365-day consideration,” Bonelli says, adding that’s why a tax professional on-call is handy.

6. Start a retirement plan

The government makes it “advantageous” for home-based business owners to save for retirement, Bonelli says, so don’t miss the opportunity.

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7. Have integrity

Tax fines and penalties for not running your home-based small business properly are stiff, says Bonelli. Get the right information and do things right from the beginning so you don’t waste money in the future.