Tax Planning and Compliance

Running a business is demanding—don’t leave money on the table come tax time.  Here are 10 tax deductions many small business owners overlook:

1. Home Office Deduction – If part of your home is used exclusively for business, you may be entitled to deduct a portion of your mortgage, utilities, and insurance.

2. Startup Expenses – Costs related to launching your business (up to $5,000) are deductible.

3. Mileage – Business-related driving, whether to client meetings or supply runs, can add up fast.

4. Business Meals – Meals with clients or while traveling for work can be 50% deductible.

5. Continuing Education – Courses and certifications to improve your skills often qualify.

6. Software Subscriptions – Tools like QuickBooks, Zoom, or Adobe Creative Suite are deductible if used for business.

7. Bank & Credit Card Fees – Monthly fees, transaction costs, and even interest may be eligible.

8. Phone & Internet – Deduct the portion of your plan used for business.

9. Professional Fees – Legal, consulting, and accounting fees are all business expenses.

10. Bad Debts – In accrual accounting uncollectable revenue can sometimes be written off.

Proper documentation is key.  Work with a CPA to make sure you’re getting everything you deserve.

Need help identifying what you can deduct this year? Contact Us 

No one wants to get that dreaded letter from the IRS. While audits are relatively rare, here are the most common red flags:

• Unusually High Deductions

If your business expenses are significantly higher than others in your industry, it can raise suspicion.

• Large Charitable Donations

While giving is great, unusually high donations relative to your income may draw scrutiny.

• Mismatched Income

Your reported income should match 1099s, W-2s, and bank deposits. If not, the IRS notices.

• Cash-Based Businesses

If you run a business that primarily accepts cash, be extra diligent with your recordkeeping.

• Home Office Deduction Abuse

Claiming a guest room or shared family space can lead to problems. It must be used exclusively for business.

How to Avoid an Audit

• Keep clean, organized records

• File on time (including extensions)

• Work with a CPA to avoid costly errors

• Don’t round numbers or estimate deductions

If you’ve received an IRS letter or are worried about your risk, we can help respond or audit-proof your books.

Contact Us to protect yourself and your business.

If you're forming a business or thinking of changing your structure, the S Corp vs. LLC debate is probably on your mind. Here’s how they differ from a tax perspective:

LLC (Default Taxation)

• Single-member: taxed like a sole proprietorship

• Multi-member: taxed as a partnership

• All profits flow through to the owner(s) and are subject to self-employment tax
  
  

S Corporation

• Still an LLC or corporation legally, but elects S Corp taxation with the IRS (via Form 2553)

• Owners pay themselves a reasonable salary (subject to payroll taxes) and take the rest as distributions (not subject to self-employment tax)

When to Consider S Corp Status

• You consistently earn $50K+ in net income

• You want to reduce self-employment taxes

• You’re comfortable with added payroll and compliance tasks
  
  

An S Corp isn’t always better—especially for low-earning or part-time businesses. Talk to a CPA to weigh costs vs. tax savings.

Need help determining the best option for you? Contact Us

Don’t wait until April to think about taxes—smart planning happens in Q4. Here’s a simple year-end checklist:

• Review year-to-date profit/loss

• Make final estimated tax payment (due Jan 15)

• Purchase needed business equipment

• Review payroll and issue year-end bonuses if desired

• Make retirement plan contributions (e.g., SEP IRA, Solo 401k)

• Write off bad debts

• Finalize charitable donations

• Capture mileage & home office logs

• Update your books for tax prep
  
  

Tip: Don’t rush to spend just for the write-off. Be strategic with what’s deductible and necessary.

Want personalized tax planning before year-end? Contact Us

If you work from home, the IRS may let you deduct a portion of your home expenses—but only if you follow the rules carefully. Here’s how to make sure you qualify and get the most from the deduction:

What Counts as a Home Office?

• Exclusive use: It must be used only for business.

• Regular use: You should use it consistently—not just occasionally.

• Principal place of business: It should be the main location where you work, meet clients, or manage operations.
  
  

Two Ways to Claim:

1. Simplified Method:

   • $5 per square foot, up to 300 sq. ft.

   • Max deduction: $1,500

2. Actual Expense Method:

   • Based on the percentage of your home used for business

   • Deduct a portion of rent/mortgage, utilities, internet, insurance, and repairs

What You Can Deduct:

• Rent or mortgage interest

• Utilities and internet

• Homeowner’s insurance

• Property taxes

• Maintenance and repairs related to the office
  
  

Tip: Keep detailed records and floor measurements to justify your deduction.

Want to know if you qualify and which method saves you more? Contact Us