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Owning a small business comes with its fair share of challenges, but one area where small business owners can find some relief is in the realm of taxes. Understanding and taking advantage of the various tax benefits available to small businesses can make a significant difference in their financial bottom line. From tax deductions to credits and strategic tax planning, there are several ways for small businesses to minimize their tax liability and maximize their savings.

One of the key advantages for small business owners is the array of tax deductions they can claim. These deductions allow businesses to subtract certain expenses from their taxable income, ultimately reducing the amount they owe in taxes. Common deductible expenses include office rent or mortgage payments, utilities, equipment purchases, employee salaries and benefits, marketing and advertising costs, professional services fees (such as legal or accounting), and even travel expenses related to conducting business.

In addition to deductions, there are also specific tax credits available for eligible small businesses. Tax credits directly reduce the amount of taxes owed rather than just reducing taxable income. For example, the Small Business Health Care Tax Credit provides assistance to employers who offer health insurance coverage to their employees.

Strategic tax planning is another crucial aspect for small businesses seeking to optimize their overall financial situation. By carefully analyzing their income streams and expenditures throughout the year, businesses can make informed decisions that will help them take full advantage of available deductions and credits while minimizing any potential penalties or surprises at year-end.

One notable benefit that should not be overlooked is the Section 179 deduction. This provision allows qualifying small businesses to deduct up-front costs associated with purchasing certain types of assets such as equipment or software rather than depreciating them over time. The Section 179 deduction provides an immediate boost by allowing businesses to expense a significant portion (up to a specified limit) in the year of purchase.

In conclusion, small business tax benefits are a valuable resource that can help entrepreneurs navigate the complexities of the tax system and keep more money in their pockets. By understanding and leveraging tax deductions, credits, strategic planning, and provisions like the Section 179 deduction, small businesses can optimize their financial position and thrive in an ever-changing business landscape.

Business Travel Expenses

The Internal Revenue Service defines a business expense as the ordinary and necessary expenses associated with traveling away from your home for your business, profession, or job. These expenses cannot be extravagant or used for personal purposes.

The following are valid business expenses:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

Net Profit

Do you properly understand how to handle your cash flow? Are you going to pay taxes purely based on

What is available in your checking account? Many business owners do not realize that their available cash is not the same as the company’s net profit.

Business Organization

Are you sure that you have chosen the proper business organization? The type of organization has a strong bearing on your tax structure and you should make sure your organization utilizes the best tax structure for your business needs. Having a small business tax professional look over the Consumer Price Index is a good way to understand your business should be properly structured.

Independent Contractors

Are you confident that your independent contractors have not become employees during the tax year? Did you provide them with the right forms? Businesses need to understand how to properly document all those who have done work for them and the Internal Revenue Service or IRS regulations on such matters can be very perplexing.

Tax Resale Certificates

Up until now, we have been primarily talking about deductions at the level of the Federal government.  It is important to also remember that there can be many money saving deductions at the state level as well.

A tax resale certificate is a signed document that indicates that the purchaser intends to resell the goods. In some states, resale certificates are also used to purchase taxable services that become a part of the property for resale.

Tax resale certificates can provide great savings that are fantastic for a business’s bottom line. However, the rules and regulations can vary greatly by the state which may cause a lot of confusion. Luckily some websites take the headache out of the process. 

You can read our handy article titled Everything You Need to Know About Tax Resale Certificates to get a comprehensive understanding of how they save your business money if you are a seller of goods. Visit taxresalecertificate.org to apply for your resale certificate as soon as possible.

We know how hard you have worked to start up your business. Being knowledgeable about tax deductions can help keep your hard-earned profits in your business so you can grow and thrive. Once again knowledge is the greatest asset one can have on the path to success.

Small businesses often overlook the importance and power of a tax resale certificate. However, understanding and utilizing this document can have significant benefits for their operations and financial health.

A tax resale certificate, also known as a reseller’s permit or sales tax exemption certificate, allows businesses to purchase goods for resale without paying sales tax. It is issued by the state’s taxing authority and serves as evidence that the business is authorized to make tax-exempt purchases.

By obtaining a tax resale certificate, small businesses can save money by avoiding the payment of sales taxes on items they intend to resell. This enables them to competitively price their products or services, giving them an edge in the market.

Furthermore, having a tax resale certificate demonstrates professionalism and credibility to suppliers and customers alike. It signifies that the business is legitimate and operating within legal boundaries. This can enhance trust with suppliers who may offer better pricing or terms knowing that they are dealing with a registered reseller.

Additionally, small businesses with a tax resale certificate can streamline their purchasing process. They no longer need to pay sales taxes upfront and then seek reimbursement later through complex administrative procedures. This simplifies accounting practices and reduces administrative burdens.

It is important for small businesses to understand the requirements for obtaining a tax resale certificate in their jurisdiction. Typically, they need to register with the appropriate state agency and provide relevant documentation such as proof of business registration or incorporation.

In conclusion, small businesses should never underestimate the power of a tax resale certificate. It not only provides cost savings but also enhances credibility, streamlines operations, and fosters positive relationships with suppliers. By taking advantage of this valuable tool, small businesses can optimize their financial strategies and position themselves for success in today’s competitive marketplace.

Tax Resale Certificates Are Essential

Having a Tax Resale Certificate is essential for businesses that sell goods or services to other businesses. It helps them to save money on taxes by allowing them to purchase items for resale without paying sales tax. A Tax Resale Certificate can also be used to purchase items from wholesalers and manufacturers at discounted prices. With this certificate, businesses can also claim back any sales tax they have already paid on purchases of goods or services they resold. Having a Tax Resale Certificate is an easy and cost-effective way for businesses to save money and stay compliant with the law.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this needs to be clarified for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business, there first needs to be nexus. A connection between the state and your business finds Nexus relating to state sales tax. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical reality as the significant requirement for creating nexus. It should be noted that physical presence is considered an essential requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

What Happens If I Do Most Of My Business In A State That I Am Not Incorporated?

If you primarily do business in a state that you are not incorporated in, make sure you apply for a Foreign Qualification (also known in some states as a Certificate of Registration or Certificate of Authority). This is the process of registering your company, which is considered domestic to the state in which it was initially formed and foreign to all other states, as a foreign entity in the conditions in which it operates. The retailer can then legally conduct business outside the state in which the company was initially formed and, therefore, should be able to

Businesses Do Not Want To Be Unprepared

Obtaining is an important step for any business that sells goods or services. It allows companies to collect sales tax from customers and remit it to the state, which protects them from potential penalties. Additionally, having a Tax Resale Certificate can make it easier for businesses to track their sales tax obligations and ensure that they are compliant with all applicable laws. Furthermore, having a Tax Resale Certificate may even provide businesses with specific discounts on their purchases of taxable goods and services. Getting a Tax Resale Certificate is an important step in helping businesses stay organized and compliant while also potentially saving money on taxes.

All The States Have Different Laws

A Tax Resale Certificate is a document that allows businesses to purchase goods and services without paying sales tax. This certificate is especially important for businesses that operate in multiple states, as it can help them save money on taxes. Having a Tax Resale Certificate also helps businesses comply with their state’s tax laws, which can help them avoid fines and penalties. Additionally, having a Tax Resale Certificate can make it easier for businesses to purchase goods and services from other states, as they don’t have to worry about filing multiple returns or dealing with different tax rates. In short, having a Tax Resale Certificate is an essential part of running a successful business.

Understanding sales tax is crucial for small businesses to ensure compliance with regulations and avoid any potential penalties. Sales tax is a consumption-based tax imposed by state and local governments on the sale of goods and services. It is important for small business owners to have a clear understanding of how sales tax works in order to accurately collect and remit it.

One key aspect of understanding sales tax for small businesses is knowing which products or services are taxable and which are exempt. Different jurisdictions may have different rules regarding taxable items, so it’s essential to research the specific regulations in your area. By correctly identifying taxable items, you can ensure that you are charging your customers the appropriate amount of sales tax.

Another important aspect of understanding sales tax is knowing when and how often to file your returns. Sales tax filing frequency varies by jurisdiction, with some requiring monthly filings while others may require quarterly or annual filings. It’s crucial to stay on top of these deadlines to avoid late fees or penalties.

Additionally, keeping accurate records of all sales transactions is vital for sales tax compliance. Small businesses should maintain detailed records that include information such as the date of sale, customer information, item description, and amount charged for each transaction. These records will not only help you calculate the correct amount of sales tax owed but also serve as documentation in case of an audit.

In conclusion, understanding sales tax is essential for small businesses to ensure compliance with regulations and avoid any potential legal issues or financial penalties. By familiarizing yourself with the specific rules and requirements in your jurisdiction, accurately collecting and remitting sales taxes becomes a manageable task that contributes to the success and growth of your business.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

Do All States Charge Sales tax?

There are also states that do not charge sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge sales tax on a state level. Alaska and Montana do allow municipalities to charge sales tax on retail goods at a local level. A tax retail certificate is not needed in these places with regard to a state sales tax.

Is The Tax Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

What If A Customer Presents Me With A Tax Resale Certificate? 

A customer can also present a tax resale certificate to you as a retailer and it is your discretion whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Understanding and complying with sales tax obligations is crucial for small businesses. As they navigate the complex world of taxation, it is essential for entrepreneurs to be aware of the rules and regulations surrounding sales taxes. In this section, we will explore what small businesses need to know about sales taxes, including their responsibilities in collecting and remitting sales tax, determining nexus, and addressing the challenges posed by online sales.

Sales taxes are a significant aspect of running a business as they impact both the bottom line and legal compliance. By gaining a comprehensive understanding of these tax obligations, small business owners can ensure that they stay on the right side of the law while managing their finances effectively.

In this section, we will delve into key topics such as collecting sales tax from customers and understanding nexus – the connection that determines whether a business is required to collect and remit taxes in a particular jurisdiction. Additionally, we will address the unique challenges faced by small businesses in relation to online sales.

By equipping themselves with knowledge about these important aspects of sales taxes, small business owners can confidently navigate their tax obligations while focusing on growing their enterprises. Let’s dive into what every small business needs to know about managing their sales taxes effectively.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

Do All States Charge Sales tax?

There are also states that do not charge sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge sales tax on a state level. Alaska and Montana do allow municipalities to charge sales tax on retail goods at a local level. A tax retail certificate is not needed in these places with regard to a state sales tax.

Is The Tax Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

What If A Customer Presents Me With A Tax Resale Certificate? 

A customer can also present a tax resale certificate to you as a retailer and it is your discretion whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

What Happens If I Do Most Of My Business In A State That I Am Not Incorporated?

If you primarily do business in a state that you are not incorporated in, make sure you apply for a Foreign Qualification (also known in some states as a Certificate of Registration or Certificate of Authority). This is the process of registering your company, which is considered domestic to the state in which it was originally formed and foreign to all other states, as a foreign entity in the states in which it operates. The retailer is then able to legally conduct business outside the state in which the company was originally formed and, therefore should be able to apply for a tax resale certificate. 

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

When it comes to taxes, small businesses often find themselves navigating through a complex web of regulations and requirements. However, with the right tax planning and strategies in place, small businesses can be smart about their taxes and ensure they are maximizing their deductions and credits while staying in compliance with the law.

Tax planning is crucial for small businesses as it allows them to strategically manage their finances and minimize their tax liability. By understanding the various deductions and credits available to them, small business owners can make informed decisions that will ultimately benefit their bottom line.

In this section, we will explore some key tax strategies that small businesses can implement to optimize their tax situation. From identifying eligible deductions to leveraging available credits, we will provide practical tips and insights on how small businesses can navigate the complex world of taxes with confidence.

So whether you’re a startup entrepreneur or an established business owner looking for ways to be more efficient with your taxes, this section will equip you with the knowledge and tools you need to make smart decisions that positively impact your financial health. Let’s dive in and discover how small businesses can take control of their tax obligations while maximizing opportunities for growth.

Healthcare Savings

Medical costs are rising and can be quite expensive. It is smart to save money for unexpected health care expenses even if you are healthy now. This can be accomplished through a Health Savings Plan or HSA.

An HSA is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums. This will help greatly in lowering taxes associated with medical costs.

HSA helps you save in taxes by letting your contributions be pretax, letting them grow tax-free, and allowing any withdrawals to also be tax-free. They are an invaluable source of savings and peace of mind. 

Home Office Expenses

Using part of your home for business allows you to deduct expenses for the business use of your home. This can be applied to all types of homes including business owners who rent.

If you use your home exclusively and regularly for conducting business you can deduct the following:

• Mortgage Interest
• Insurance

To qualify for the home office deduction, you must show that your home is used regularly and exclusively for conducting business and is the principal place of business.

There are two methods for calculating the house office deduction. In the standard method, you use Form 8829 to itemize the various expenses involved in using and maintaining your home office. This includes rent or mortgage interest payments, utilities, homeowners insurance premiums, and property taxes. In the simplified method, you determine the square footage of your home office (up to 300 square feet) and multiply it by five dollars.

The simplified method is more straightforward but you should see which one gives you a larger deduction amount.

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels, and a platform like Amazon.

Business Travel Expenses

The Internal Revenue Service defines a business expense as the ordinary and necessary expenses associated with traveling away from your home for your business, profession, or job. These expenses cannot be extravagant or used for personal purposes.

The following are valid business expenses:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

The Various State Tax Laws Can Be Confusing

Dropshippers must understand that each state has its unique tax laws related to retail sales tax that are constantly changing. There are many different definitions of what is nexus and what manner of tax resale certificates are acceptable. Some states accept resale documentation from other states, while many do not.

Third-party fulfillment companies make this even more difficult to comprehend.  A large company like Amazon can have one shipment travel through a dozen states, which can often trigger nexus.

That Is Why We Are Here To Help

Understandably, all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemption status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Make Sure Your Documents Are In Order

Do an inventory of all your business records. It is key to have the right documents to accurately report your earnings and expenses. Computer software like Excel or Quicken greatly helpsfor in organizing your tax records. These programs can also save you time by importing information directly into your tax return.

Equipment and Furniture

Section 179 is a tax law that allows business owners to deduct the full purchase price of qualified equipment from their gross income. Rather than deducting a certain percentage of the equipment under a multi-year depreciation schedule, as is customarily done, business owners can deduct the full price, as long as it is under$2.5 million if it was financed or purchased in 2018.

Qualified assets for Section 179 include:

•    Machines or equipment purchased for business use.
•    Office furniture.
•    SUVs, pickups, and vans weighing more than 6,000 pounds.
•    Certain improvements to the interior of commercial property.

Read our handy article Tax Deductions that Every Small Business Owner Should Know to find out about more money-saving tax deductions.

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels, and a platform like Amazon.

Depreciation

If you have a business asset that is expected to last more than one year, you can depreciate the cost of the asset over its life rather than deducting the cost of the asset the year that you purchase it. Depreciation is fully deductible. Examples of assets that can be depreciated are:

• Cars
• Furniture
• Technology like computers
• Improvements to leased property

You can not include inventories, stock-in-trade, and land cannot be as a depreciated tax deduction.

Employee benefits

If you have employees and provide health insurance and other benefits then you can fully deduct the costs of those benefits.

Home Office Deduction

Using part of your home for business allows you to deduct expenses for the business use of your home. This can be applied to all types of homes including business owners who rent.

If you use your home exclusively and regularly for conducting business you can deduct the following:

• Mortgage Interest
• Insurance
• Utilities
• Repairs
• Depreciation for that area

To qualify for the home office deduction, you must show that your home is used regularly and exclusively for conducting business and is the principal place of business. 

For a full explanation of tax deductions for your home office refer to Publication 587, Business Use of Your Home. In this publication you will find:

• Requirements for qualifying to deduct expenses (including special rules for storing inventory or product samples).
• Types of expenses you can deduct.
• How to figure the deduction (including depreciation of your home).
• Special rules for daycare providers.
• Tax implications of selling a home that was used partly for business.
• Records you should keep.
• Where to deduct your expenses (including Form 8829, Expenses for Business Use of Your Home, required if you are self-employed and claiming this deduction using the regular method).

Any Labor That is Contracted

This includes all fees paid to independent contractors. If you hired a graphic designer to style a logo for you or contracted with a developer to make your website, their fees are fully tax-deductible.

If you paid a contractor $600 or more over the course of the year, you’ll even have to file Form 1099-MISC.

Depreciation

If you have a business asset that is expected to last more than one year, you can depreciate the cost of the asset over its life rather than deducting the cost of the asset the year that you purchase it. Depreciation is fully deductible. Examples of assets that can be depreciated are:

• Cars
• Furniture
• Technology like computers
• Improvements to leased property

You can not include inventories, stock-in-trade, and land cannot be as a depreciated tax deduction.

Employee benefits

If you have employees and provide health insurance and other benefits then you can fully deduct the costs of those benefits.

Insurance

A self-employed person can deduct the premium of various types of business insurance. This can include:

• Fire
• Theft
• Worker’s Compensation
• General Liability

Vehicle Expenses

So, if a self-employed person uses their vehicle for 100 percent business use and the vehicle is in the company’s name, then the car or truck is fully deductible.

If the vehicle is in your name and used partly for personal, partly for business use, then there are two ways to calculate the deductions

Track your actual car expenses, including gas, maintenance, insurance, and depreciation, and deduct a percentage supported by the number of business miles you drive.

Deduct a typical rate on each “business” mile driven for the year. For 2020, the quality mileage rate is 57.5 center per mile driven for business use, down from 58 cents per mile in 2019.

No matter which method you select, you will have to keep track of what percentage of business and private miles you drive. You can use a manual log or an online app.

It Is Never Too Early To Plan For Taxes

It is true that 2020 was a year that had a lot of personal challenges for small businesses. However, understanding your tax liability for the coming year is always a good idea and it is never too early to start. There is no reason that taxes need to be a mystery and you can forecast what you will owe in the coming year.

Become Proactive

Business taxes are determined by net income. This is when you subtract business expenses from gross revenues. Having an online accounting system automatically keeps track of your figures. If you use an online accounting system and you’ve entered all income and expenses, the system will automatically provide you with a gross profit figure.  Those that use spreadsheets, please take the time to add up the numbers so you can forecast what you will need to owe in taxes for the following year.

Is Your Business a Pass-Through Entity?

A pass-through entity is when the tax liability of the business actually passes through to the owner.

Pass-through entities include:

• Sole Proprietorships
• Limited Liability Companies
• S Corporations

A business that has not filed any paperwork is automatically considered a sole proprietorship by the Internal Revenue Service.

If you are a pass-through entity then you could owe less in taxes. The Tax Cuts and Jobs Act allows a 20 percent tax deduction on qualified business income from pass-through businesses. Generally, the deduction is available to eligible taxpayers whose taxable income is below $315,000 for joint returns and $157,500 for individual filers, according to the IRS. Some types of pass-through businesses may not qualify for this deduction: The IRS regulations detail the limitations.

If your business is a pass-through entity, then the taxable business income must be reported with your personal tax return. This means the amount you owe will be determined by your personal tax bracket. For 2020, personal tax brackets range from 10 percent (for individuals earning up to $9,875 and joint filers earning up to $19,750) to 37 percent for individuals earning more than $518,400 and joint filers earning more than $622,050.

If Your Business Is A C-Corporation

A business that is not a pass-through entity is a C-corporation. These are usually larger companies that do not qualify as small businesses.  However, if your business is a c-corporations it will now be taxed at a flat rate of 21 percent. Remember that c-corporations are always taxed twice. That is because the c-corporation itself is looked upon as a separate entity. These entities are taxed at the business level and the shareholder level.

There Are Other Taxes Besides Income Taxes

Businesses pay more than just income taxes. They include the following:

• Employment taxes on wages paid to employees and to the owner (you). 
• Social Security
• Medicare tax 
• Federal unemployment tax (FUTA)

Social Security tax is 12.4 percent of all wages paid up to $137,700, with half paid by the employee and half paid by the employer. Medicare is equal to 2.9 percent of wages paid (3.8% on wages in excess of $200,000 ($250,000 for joint returns, $125,000 for married taxpayers filing a separate return), half paid by the employee, and half paid by the employer. FUTA is generally equal to 6 percent of the first $7,000 of each employee’s wages and is paid by the employer. Self Employed owners will have to pay a total amount of Social Security taxes and Medicare taxes since there is not a separate employer to pay it for you.

Remember The Deductions

Read our helpful article on deductions that your small business can not afford to miss.  It includes the following:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)
• Many apps have come on the market that makes it exceptionally easy to scan and track receipts for travel-related expenses. Some of these apps also automatically categorize expenses which is very nice for accurate bookkeeping.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

As a self-employed individual, it is crucial to take advantage of every tax deduction available to you. By maximizing your deductions, you can significantly reduce your taxable income and ultimately save money. Here are some of the most valuable tax deductions that self-employed individuals should consider:

1. Home Office Deduction: If you have a dedicated space in your home that is used exclusively for business purposes, you may be eligible for a home office deduction. This deduction allows you to deduct expenses such as rent, mortgage interest, utilities, and insurance related to your home office.

2. Business Expenses: Any expenses directly related to running your business can be deducted. This includes office supplies, equipment purchases or leases, software subscriptions, travel expenses for business purposes, and professional services fees.

3. Self-Employment Taxes: As a self-employed individual, you are responsible for paying both the employer and employee portions of Social Security and Medicare taxes. However, you can deduct the employer portion of these taxes on your tax return.

4. Health Insurance Premiums: If you pay for your own health insurance coverage out-of-pocket as a self-employed individual, these premiums may be deductible on your tax return.

5. Retirement Contributions: Self-employed individuals have several retirement plan options available to them that offer tax advantages. Contributions made to retirement plans such as SEP-IRAs or Solo 401(k)s are typically deductible up to certain limits.

6. Education Expenses: If you take courses or attend conferences that directly relate to improving or expanding your skills within your profession or industry, these educational expenses may be deductible.

It’s important to note that tax laws can be complex and subject to change. Therefore, it is advisable to consult with a qualified tax professional who can provide personalized advice based on your specific circumstances.

Starting Up

Even though starting up a business is easier than ever before, there are still costs associated with any new venture. Luckily, You can deduct up to $5,000 of all the costs related to starting a new business if your business was started this tax year. This can include things like market research and advertising for your business launch. 

Insurance

A self-employed person can deduct the premium of various types of business insurance. This can include:

• Fire
• Theft
• Worker’s Compensation
• General Liability

Vehicle Expenses

So, if a self-employed person uses their vehicle for 100 percent business use and the vehicle is in the company’s name, then the car or truck is fully deductible.

If the vehicle is in your personal name and used partly for personal, partly for business use, then there are two ways to calculate the deductions

Track your actual car expenses, including gas, maintenance, insurance, and depreciation, and deduct a percentage supported by the number of business miles you drive.

Deduct a typical rate on each “business” mile driven for the year. For 2020, the quality mileage rate is 57.5 center per mile driven for business use, down from 58 cents per mile in 2019.

No matter which method you select, you’ll have to keep track of what percentage of business and private miles you drive. You can use a manual log or an online app.

Qualified assets for Section 179 include:

•    Machines or equipment purchased for business use.
•    Office furniture.
•    SUVs, pickups, and vans weighing more than 6,000 pounds.
•    Certain improvements to the interior of commercial property.

Read our handy article Tax Deductions that Every Small Business Owner Should Know to find out about more money-saving tax deductions.

Corporate Alternative Minimum Tax Credits

The corporate alternative minimum tax is defined as “A variety of exclusions, deductions, and credits are available to corporations, which often allow them to reduce the amount of tax that they are required to pay on the income they earn, sometimes to zero. To ensure that these corporations pay at least some tax on their income, Sec. 55 imposes an alternative minimum tax (AMT), which requires many corporations to add back some of these deductions and credits and pay tax on this reconfigured amount.”

This was repealed in 2017 and the AMT was made available as refundable credits ending in 2021. The federal government is allowing businesses that were going to receive AMT credits at the end of 2021 to claim a refund now due to the pandemic.

How Do I Know If My Business Needs To Collect Sales Tax?

Forty-five out of the fifty states require businesses to collect sales tax. This does not even include that many cities and localities that also have sales tax regulations. You must understand the rules of the places that you do business. Does your state or local area require some sort of license or sales permit? Be sure that you are charging the correct rate for both the point of sale and the types of products your business sells.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

As a self-employed person, getting a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

When it comes to tax deductions for the self-employed, there are several opportunities to maximize your savings and reduce your taxable income. By taking advantage of these deductions, you can keep more of your hard-earned money in your pocket.

One of the most significant tax deductions for the self-employed is the home office deduction. If you use a portion of your home exclusively for business purposes, you may be eligible to deduct expenses such as rent, mortgage interest, utilities, and even repairs and maintenance.

Another valuable deduction is the vehicle expense deduction. If you use your vehicle for business purposes, whether it’s for meetings with clients or delivering products, you can deduct expenses such as gas, insurance, maintenance costs, and even a portion of your lease or loan payments.

Health insurance premiums are also deductible for self-employed individuals. This includes not only medical and dental insurance but also long-term care coverage. By deducting these premiums, you can offset some of the costs associated with staying healthy and protected.

Additionally, don’t forget about deductions related to business-related travel expenses. If you need to travel for business purposes – whether it’s attending conferences or meeting clients – you can deduct expenses such as airfare or mileage costs, accommodations, meals, and even transportation while at your destination.

Lastly, don’t overlook deductions related to professional development and education. Expenses incurred for courses or workshops directly related to improving your skills in your field are generally deductible.

Remember that keeping accurate records is crucial when claiming these deductions. It’s always recommended to consult with a tax professional who can guide you through the process and ensure that you’re maximizing all available deductions while staying compliant with tax laws.

Taking advantage of these good tax deductions for self-employed individuals like yourself can significantly reduce their tax liability and keep more money in their pockets – allowing them to invest back into their businesses or enjoy personal financial growth.

Many people are turning to self-employment as a means of earning income and doing something that they love. There is a great opportunity today for someone to be their own boss and start a company even if they do not have a great deal of money. However, being self-employed can be quite challenging when it comes to taxes. That is why we have composed a listing of tax deductions that smart self-employed people can not afford to miss.

Professional Services

A self-employed person can deduct fees paid to licensed professionals like attorneys and accountants, as long as some of the services are done in furtherance of your business. Just make sure you separate the business and personal fees.

Licenses And Certifications

You can deduct any expenses associated with business licenses, certifications, and regulatory fees related directly to your business. This can include incorporation fees and small business licenses for your state.

Rent Or Leasing Payments

If you rent office space, cars, or any physical equipment for your business, all those expenses are deductible.

If you leased your car for a term of 30 days or more, though, you’ll need to reduce the deduction by an “inclusion amount.” For more information, refer to the “Leasing a Car” section in chapter 4 of Pub. 463.

Repairs and maintenance

This category includes incidental repairs and maintenance made to machines and other property. For example, you can deduct costs for painting your office or fixing your broken computer.

Educational Expenses

Any expenses that are work-related education expenses can be deducted.

To be deductible, your expenses must be for education that:

(1) Maintains or improves your job skills or

(2) The law requires you to keep your status or occupation. 

However, albeit the education meets either of those tests, the education cannot be a part of a program that will qualify you for a replacement trade or business or that you have to meet the minimal educational requirements of your trade or business.

Expenses that you can deduct include:

• Tuition, books, supplies, lab fees, and similar items
• Certain transportation and travel costs, and
• Other educational expenses, like the value of research and typing

Supplies

Incidental office supplies such as paper, pens, and clips can be deducted from your taxes. However, if the supplies are consumable, such as plastic needed to produce a product, you are limited to only deducting the amount that you use for the tax year, not the total amount that you purchased.

Insurance

A self-employed person can deduct the premium of various types of business insurance. This can include:

• Fire
• Theft
• Worker’s Compensation
• General Liability

Vehicle Expenses

So, if a self-employed person uses their vehicle for 100 percent business use and the vehicle is in the company’s name, then the car or truck is fully deductible.

If the vehicle is in your personal name and used partly for personal, partly for business use, then there are two ways to calculate the deductions

Track your actual car expenses, including gas, maintenance, insurance, and depreciation, and deduct a percentage supported by the number of business miles you drive.

Deduct a typical rate on each “business” mile driven for the year. For 2020, the quality mileage rate is 57.5 center per mile driven for business use, down from 58 cents per mile in 2019.

No matter which method you select, you will have to keep track of what percentage of business and private miles you drive. You can use a manual log or an online app.

If you have a fleet of business vehicles, which is usually five or more, you must use the actual expense method.

Mileage

The Internal Revenue Service allows you to deduct mileage that is used for business purposes.

They are as follows:

• 58 cents per mile for business miles driven, up from 54.5 cents for 2018
• 20 cents per mile driven for medical or moving purposes, up from 18 cents for 2018
• 14 cents per mile driven in service of charitable organizations, unchanged from 2018

Remember to add all business parking fees and tolls paid during the year, as these are deductible too.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

As a self-employed person, getting a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

In the modern retail landscape, tax resale certificates have become more important than ever. As businesses adapt to changing regulations and consumer expectations, understanding and utilizing these certificates can provide significant advantages.

Tax resale certificates are documents that allow retailers to purchase goods for resale without paying sales tax. They serve as proof that the retailer intends to resell the items rather than consume them. By obtaining and properly using these certificates, retailers can avoid paying unnecessary taxes on their inventory.

One of the key reasons why tax resale certificates are crucial in today’s retail industry is the rise of e-commerce. With online shopping becoming increasingly popular, retailers often sell products across state lines. Each state has its own sales tax laws, and failing to comply with these regulations.

Take Hold Of Your Destiny

Some people are scared of the stress that often comes along with managing a business. They think that will not be able to handle keeping up with the ever-changing marketplace. What they often do not take into account is that day-to-day jobs can be just as stressful. Often, employees have to live up to the unrealistic expectations of several managers. Being an entrepreneur gives you more control over your own destiny, rather than having your fate be in the hands of other people. This way you can shape your life according to your needs.

The internet has opened up new opportunities for many people. It is a vast marketplace that can be a goldmine for enterprising and smart business people. The numbers are very promising.

In 2017, e-commerce was responsible for around $2.3 trillion in sales and is expected to hit $4.5 trillion by 2025. In the US alone, e-commerce represents almost 10% of retail sales and that number is expected to grow by nearly 15% each year.

Corporate America Is No Longer Stable

Perhaps you love your job. There is nothing wrong with being fulfilled by your work and enjoying a corporate environment. This can change very quickly when your company merges or is sold to new owners. It is not unusual for things to change completely just on the resignation of key officers. This can make the workplace atmosphere you once loved has suddenly become unbearable. You might now be in the predicament of proving yourself all over again even after many years of loyal service. It is better to work for yourself and be the master of your own destiny. 

Become Proactive

Business taxes are determined by net income. This is when you subtract business expenses from gross revenues. Having an online accounting system automatically keeps track of your figures. If you use an online accounting system and you’ve entered all income and expenses, the system will automatically provide you with a gross profit figure.  Those that use spreadsheets, please take the time to add up the numbers so you can forecast what you will need to owe in taxes for the following year.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

By obtaining tax resale certificates for each applicable state, retailers can ensure they are following proper procedures when selling products online. This not only helps them remain compliant with tax laws but also allows them to compete on a level playing field with other e-commerce businesses.

Furthermore, in an era where consumers value transparency and fair pricing, having a valid tax resale certificate demonstrates credibility and professionalism. It assures customers that the retailer is operating legally and ethically by adhering to taxation requirements.

Additionally, tax resale certificates play a vital role in B2B transactions. Many businesses rely on wholesale suppliers for their inventory needs. By providing a valid certificate, retailers can establish themselves as legitimate resellers and gain access to exclusive pricing or discounts from wholesalers.

In conclusion, understanding the importance of tax resale certificates in today’s retail landscape is essential for businesses looking to thrive in an increasingly competitive market. These documents not only help retailers navigate complex sales tax regulations but also enhance their credibility among consumers and facilitate beneficial B2B relationships with wholesalers.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

As a self-employed person, getting a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies used in products you will resell, such as wood for a cabinet.

However, the process can be difficult, and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can ensure you get all the advantages of a tax resale certificate without dealing with the hassle of government red tape. Let us handle the hard stuff so you can run your business confidently. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.