This year is drawing to a close, and it’s time to tally up all of the many ways your business will save money this year. Wait. You don’t have a multitude of ways to save money? Where are all of your deduction? They are your lifeline in a sea of never-ending taxation. Here, use these and don’t tell anybody.
Send Out 1099-Misc Forms
Making sure you’re not taxed on business expenses is one of the best ways to lower your tax burden. Duh. But how do you do this other than keeping track of your receipts? Well, LibertyTax.com advises to send out 1099-Misc forms for all vendors that you spend more than $600 with during the year.
By doing this, you’re reporting income to another business but, more importantly, you’re proving that you actually spent money on a business expense. If push comes to shove, you can prove that you actually did spend money on those goods or services.
Donating Unsold or Unused Inventory
If you have unused inventory, consider donating. Why? Because you’ll get a tax deduction for it. Then, you can take the money you saved and buy new inventory. This works especially well when you sell perishable goods – you would have to write them down anyway. Might as well give them away and let someone else benefit from them while they can. Just keep in mind that donations greater than $500 require more rigorous reporting.
Deduct Educational Expenses Related To Your Business
This is probably one of the best ways to keep your income down. Educational requirements are normal in many industries like finance, law, and accounting. If you’re a professional, it’s almost a given that you’ll have to do some kind of continuing education. However, even if you’re not a professional, you can still go to educational seminars, spend money on continuing your education in a vocational school or even an apprenticeship.
All of these educational efforts are tax deductible as a business expense. So, don’t be afraid to spend money here. You’ll become better at what you do and you’ll also end up saving yourself a significant amount of money.
Keep All Receipts
Make sure you’re keeping all receipts from all business expenses. Many business owners slack on this one, and throw away receipts under $75 for things like business meals and entertainment. Why? Because the IRS generally doesn’t require that you show documentation for expenses under this dollar amount. However, it will require you to show proof of those expenses if you’re ever audited.
Now, realistically, you could take all expenses that are under $75 each and create some kind of proof – but you would need to detail the time, place, person or company you spent money with and other pertinent details about the transaction (i.e. what it was for).
Of course, all this can be gleaned from the receipt itself, so the logical question is, “Why not just keep the receipt?” It makes things simple. In fact, it’s actually not too difficult to find applications for your smartphone where you snap a photo of the receipt and then upload it somewhere. That way, your receipts are safe and you can toss the crumples of paper in the wastebasket.
Jeremy S is passionate about small business success. He enjoys writing about the tips and tricks to great money management for small operations.
Cloud storage is a current hot topic. Essentially, it provides the means through which everything from computing power to applications and data storage can be delivered remotely by third party providers. This means you can use software and hardware via the internet without needing to possess it yourself.
The computing power, functions and data are scaled up or down based on user demand. It becomes a utility. Like using gas or electricity, you pay a certain amount for the basic service and costs are then linked to how much you actually consume.
Privacy and security is always an issue and can be even more important for businesses. Accounts, contact lists and other sensitive data could all cause serious potential problems if compromised.
If a business makes use of fully comprehensive online accounting, data storage or any other cloud-based services, it’s imperative that the company uses a reputable third party provider and adopt safe practices, just as in any other situation.
A host of companies both great and small are now using cloud storage and cloud computing. Google and Amazon, for example, both now have most of their IT resources in the cloud. You might think, ‘If it’s good enough for them, it’s good enough for us’ but is the cloud really safe for the average small business or do we have our heads in the, well…clouds?
As with any choice, there are pros and cons to working in the cloud. There are, however, a number of steps you can take to help protect yourself and make an informed choice.
When choosing a provider, you should always ask where the data will be stored (if it’s within the EU you’ll be protected by data protection rules that can vary elsewhere) and who in the supplier’s organization will have access to stored data.
All data should be effectively encrypted and Dave Anderson, Director of Strategy at Voltage Security, suggests that you should also encrypt data at the point of creation, before it is even sent to the cloud. Passwords can also be an issue. Easily guessable passwords such as ’123456′ are still common even on a corporate level.
Storing data in the cloud does have some benefits over storing on servers in-house. In the case of a physical break-in, thieves would be faced with banks of thousands of identical machines, code labelled so that it would be extremely difficult to locate a server with specific pieces of data.
The scale of a cloud service provider can also have benefits. Security skill and experience can be prohibitively expensive to bring it within a small business, but the scale and nature of a dedicated cloud provider means it’s in their own best interests to ensure they are secure and well-prepared.
Cloud computing and data storage is not impregnable. Like any other means of data storage there are risks involved, but following best practices can help minimise the risk of your data being compromised.
One of the most demanding travelers, other than the President of a nation, are travelling businessmen. Why? They need fast results while they are on the go. For this reason, airline companies, hotel conglomerates, and banking institutions give preferential treatment to the business class.
Here’s rundown of the essential needs of a business traveler.
24/7 Access to Online Banking
The main reason why businessmen travel is to complete a transaction. Out of this completed transaction, expect to gain some profitable venture. For this reason, it’s important that businessmen have 24/7 online access to banks. Most of the time, businessmen handle and transact money in most of their travel ventures.
Say, an American businessman is travelling into Scotland to process a sale and he needs to handle money; instead of accepting the physical money bills, the one he’s transacting with can easily wire the money to the businessman’s account through a bank’s online payment services. The businessman or his company only needs to open a business account.
The online payment services of a banking institution are essential operation on the part of businesses that regularly receives payments. It’s a safer way to handle money especially on the part of a businessman who is constantly on the go.
Airport Services for Business Travelers
When it comes to the traveling community, when you say business travelers, they are given a distinction and class of their own. Ergo, they have many privileges compared to the ordinary travelers.
In the airport, they have facilities that are exclusively offered only to the business travelers. You have an airport lounge complete with Wi-Fi services exclusive only to business travelers. Some of the first class airport lounges are complete with shower rooms, napping rooms, and even a spa.
It also have bars complete with bar tending service. All these amenities and facilities are aimed at making the life of the business traveler easy while he travels. Other essential services offered by airport facilities aimed to assist the business man are the notary, faxing, photocopying, shipping service, just to name a few.
Hotel Service for Business Travelers
To complete the dynamic business service for business travelers, hotel establishments are modifying their service to satisfy the needs of its business customers. Their overall purpose is to make the life of the business traveler convenient while being away from home. Included in the essential hotel services for business travelers are Business Centers.
The hotel should be able to offer facilities for fax or printing. This is necessary especially if the businessman is currently expediting a business deal. Another important service is the shuttle service. Oftentimes, renting a car can be a drag on the part of the traveling businessman; instead, some of them opt to pay for shuttle service. The hotel establishment should have this service being offered.
Room service is perhaps the most important convenience a hotel establishment can provide their business traveler customer.
When it comes to the convenience of business travelers, establishments should be able to provide services, amenities, and facilities that expedite and assist the businessman in his comfort and business dealings.
Cars are the ultimate luxury for many that are still reeling from the affects of the economic recession and people are having to find new methods of acquiring a car to ensure they are able to transport themselves from one destination to another.
Car finance has always been a common method of achieving a new or used vehicle that makes car purchase affordable and a reality. Most car retailers such as www.jenningsmotorgroup.co.uk offer the opportunity to take on a finance package with varying benefits, terms and costs available to suit both the consumer and the seller.
Finance packages allow the consumer to have a more valuable and modern vehicle at an affordable cost, something which would be impossible without financing.
Common Finance Packages
There are three main finance packages that can meet the requirements of the car buyer but as with anything care and consideration must be taken to ensure that the package selected is affordable and the terms are realistic to a specific situation.
Hire Purchase is the most popular form of finance package that most if not all retailers offer. A deposit is paid to secure the vehicle, which can often be a part exchange car or a lump sum.
The remaining value of the car is paid through monthly instalments, an amount which decided depending on the length of the contract term. After the final payment is made the car belongs solely to the consumer.
Personal contract purchase works in much the same way as a hire purchase. A deposit is paid upfront and monthly instalments are required to cover the cost of the car. The monthly payments are lower for a shorter term as a lump sum is required to be paid at the end of the contract for the consumer to take ownership of the vehicle or you have the option of handing the car back.
In principle, if the car is returned, the car has simply been rented for the duration of the contract term.
Lease purchase requires a deposit and lower monthly payments with a final payment expected at the end of the finance contract duration. The final payment however is subject to change if the car is worth less than the amount owing.
There is also the opportunity to part exchange or sell the vehicle provided any finance owning is settled. (Think along the lines of house negative equity)
In 2011, 26% of car buyers used finance to acquire a new vehicle showing that finance is quickly becoming the most common method of acquiring a vehicle but there are risks and requirements involved and care must be taken before a finance package is accepted to ensure it is affordable and can be maintained in the long term.
The retailer is there to offer advice and guidance and it is always beneficial to discuss finance options with the expert. 70% of cars are purchased through finance and retailers are becoming more in tune with the needs and the requirements of the consumer and the issues they face when attempting to purchase a vehicle.
This article was written by freelance writer and mother of three, Kathryn Thompson. Follow her on Twitter: @katht35
Tax is something that most salaried employees have little, if any, direct involvement with and the need to be aware of and calculate it is often the main thing that intimidates those who are thinking about making the move into contracting.
If you’ve got questions relating to taxation, then read on for a guide to the taxes applicable to contractors and the options open to them to help dealing with the associated concerns.
Do I have to pay tax if I set up a limited company?
Contractors who set up limited companies can legally reduce the amount of tax and National Insurance contributions they are required to make.
This is because it enables you, as a director of the company, to decide your own salary. For example, the optimal salary in the 2012/13 financial year was £8,105 – which equated to £675 per month.
Such a total fell under the individual level of personal allowance for income tax during that year and only minimal National Insurance was levied.
Any additional money that you earn through contracts can then be held within the company and withdrawn as dividends, which attract a much lower rate of tax and no deduction for National Insurance.
Can anyone set up a limited company?
The process of setting up a limited company is actually quite simple and can be done quickly and easily. However, the levels of administration involved with operating in this manner – such as invoicing, calculating expenses, completing tax returns (more information can be found here) – mean you should consider whether this is the best method for you.
Another key factor is a piece of legislation known as IR35. This prevents you from working as a limited company contractor if a client dictates when, where and how you complete your contract.
The ruling was introduced to prevent salaried employees being listed as directors to limit their tax and National Insurance contributions. If you are deemed to be inside IR35, HM Revenue and Customs (HMRC) will not consider you to be self-employed. In such cases, contractors should look to utilise the services of an umbrella company.
If you are in control of when, where and how you complete your contracts, it is highly likely you will be considered to be outside of IR35 and will be free to operate as a limited company contractor. However, each situation is considered by HMRC on a case-by-case basis, so it is difficult to know for certain how your IR35 status will be deemed. A credible accountancy service provider will offer an IR35 review of your contract if you are in doubt of your IR35 status.
Can I get any help with planning my tax as a limited company?
There are a number of firms that will be able to offer tax advice and compliance services, which will aim to reduce the stress for you when operating as a limited company.
In addition to helping you deal with any investigations by HMRC and the completion of tax returns, these companies will also be able to advise you on the best long-term planning of tax for the company and your personal situation.
For example, should you wish to make an investment through your company, extend your shareholding or explore additional reductions and reliefs, these are all areas in which you will be given expert advice tailored to your specific situation.