Tip #1: Like a Boy Scout. Be Prepared.
Like tax season, summertime is a busy time of year for Gravity. So we prepare by keeping inventory stocked and paperwork organized.
To help you mitigate the risk of filing incorrectly or missing out on beneficial deductibles this tax season, develop a organization method. Schedule time each month before April 17 to get your paperwork and expenses in order. By collecting business receipts, reconciling bank and credit card accounts by matching your expenses to your statements, and filing away bills and paperwork in appropriately labeled folders or files, you can reduce your level of deduction FOMO.
Tip #2: Driving = Deductibles
Being mobile isn’t exclusive to the device in your hand. Many business owners and employees have to travel for work. Being accessible to small businesses 24/7 often times means Gravity employees can log some serious mileage for work. By taking advantage of the IRS standard mileage rate or by calculating actual expenses, employees can count miles on the road for business purposes as a deduction.
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If you use the IRS standard mileage rate, you will need to record all business trips, reasons, dates, and mileage. As jotting down the details with pen and paper is something for the birds, they’ve developed an app to help you keep track. Actually, there are several apps with some of them even integrating into tax software and applying the current year’s standard rate for you. A couple of fan favorites are MileIQ and MileageLog.
Deciding to calculate the actual expenses for a deduction can be a bit more cumbersome, but can be beneficial if you use your vehicle more than 50 percent of the time for business. With this method, you will need to provide complete information on all expenses derived from using your vehicle for business. Some Interest expenses on vehicle loan or lease payment, annual depreciation, registration fees, gas purchases, oil, and maintenance expenses.
Tip #3: Depreciation Appreciation – Section 179 Depreciation
Keeping up with the latest technology can be costly on a business. Thankfully, section 179 exists. Business owners can take advantage of this tax code to deduct the full cost of equipment or property purchased up to $500,000 within that year for business. This allows owners to use the full deduction in one year’s taxes rather than having to write off the expenses a little at a time through depreciation.
Section 179 has numerous exceptions and special deductions associated with it. For more information, check out the official IRS web page or visit Section179.org.
Tip #4: Food for Thought
At Gravity, we celebrate merchant catered lunch every Wednesday in our Seattle office. By providing your employees or team with a meal, you are able to deduct 100 percent of the expense. Other ways to score delicious deductions are through dining and entertaining expenses. Whether you are dining with a client or on eating out on a business trip, you are able to deduct 50 percent of the expense. This same rule applies to entertainment expenses.
#5 Learn Something, Deduct Something.
Investing in your employees is an essential part of growing a successful business. So, whether it means taking a class or workshop, attending a seminar or trade show, or purchasing educational materials, you can apply a deduction.
Growth and development is something we believe in wholeheartedly at Gravity. We encourage our employees to follow their passions, even when it may mean shifting roles and responsibilities. The flexibility to move around and grow within a company can prove be more beneficial for employee development than just climbing the hierarchical ladder.