Magazine for the professional nail industry.
Issue link: http://nailsmag.epubxp.com/i/317565
50 | NAILS CAREER HANDBOOK 2014 >>> > Don't forget often-overlooked deductions. Many small-business owners work while they're home, so some expenses associated with home expenses may be able to be partially written off as a business expense. Three areas where small-business owners may be able to save are the Internet, cell phone, and gas (or mileage). Think about the miles you accumulate when you are business prospecting, driving to another salon to teach, train, or attend classes, or picking up supplies. > Take deductions for home-based salons. Home-based techs who designate a section of their living space exclusively to a salon area are able to deduct a portion of everything in the home — including rent or mortgage, utilities, snow removal, etc. Whatever portion of the house is used becomes the percentage of each bill that can be expensed. > Show your depreciation. Becky Tyner, a tax preparer for Jackson Hewitt, reminds business owners to deduct depreciation value. Typically depreciation value comes from large items, such as furniture, sinks, and cabinets, which are expected to last for years. > It may not benefit you to ask for your refund. Let's say you saved $1,000 to pay your quarterlies. Then you realize you're going to get $1,000 back from having overpaid earlier in the year. Instead of writing a check to the government and then waiting for them to send you a check in return, just leave your money in the bank. Roll the money you are entitled to receive into your quarterly payment. This way the money you've saved becomes your "tax return." It's yours to use and invest now, instead of waiting a number of weeks for the check to arrive in the mail. > File an extension. If you simply can't get your paperwork together, file an extension (form 4868) — but still send an estimated payment. An extension means you've been granted more time to file your return. You have not been granted an extension to pay what you owe. Interest on what you owe begins to accrue beginning April 16. Sending an estimated amount instead of an exact amount will save you from the penalty of paying a fine above and beyond the interest. Thankfully, since an extension can be filed electronically, it's relatively painless. > It pays to show a profit. While the idea is to pay as little as possible, the IRS expects you to make a profit, says Tyner. If you don't show a profit for three out of five years, the IRS will consider your business a "hobby," which means you have no deductions. Plus showing a loss hurts in other ways: It hurts your loan viability and it lowers your social security. > Seek professional help. If the gray areas of deductions give you a headache, they make a good accountant's heart race at the possibility of "finding money." Hire an accountant who will not only prepare your taxes, but also help prepare you by guiding you with an organizational system you can use all year. Tax Time Tax time can mean stress, especially when you wait until the last minute. Phil Strawn, a CPA in Binghamton, N.Y., offers tips to make this time of the year a little less taxing. how to survive…