Are You Doing Your Business Taxes Correctly?
Certain things about filing small business taxes can trigger a warning to the IRS, making it more likely for them to audit you. Therefore it is important to make sure you file your business taxes correctly.
For instance, the home office deduction is one of those expenses that makes small business owners get greedy — and the IRS knows it. Your home office must be dedicated SOLELY to your business — in other words, you must use that space for nothing other than business. Also, you must use the space regularly, AND (according to some interpretations of the tax code) you must use it for meeting clients.
If you don’t do all of these things, the IRS may invalidate your home office deduction, and you may end up with a lot of back taxes (and fines!) to pay — so make sure the expense is valid before taking the home office deduction.
Not all mistakes err on the side of you paying too little in taxes, though — you may be paying too much, especially when it comes to how you are expensing things like business property. Cost segmentation services, also known as cost segregation, analyzes the net present value of your property and determines whether you are expensing it properly for the maximum deduction. If you can hasten the depreciation, or life span, of the property, you can then claim a greater percentage of the property’s value as an expense each year.
Tags: cost segmentation services, cost segregation, depreciation, home office deduction, net present value, small business taxes