Taxes for small business

Paying taxes is something that almost everyone doesn't want to do, but is necessary to keep the business world moving.Running a small business requires a significant amount of attention be paid to taxes for many different reasons.Taxes can be a blessing and a curse to a small business and here is some more information on taxes for small business.

Some of the biggest questions for small business owners and taxes revolve around what is and what isn't tax deductible.There are so many various expenses that go into running a small business and only some of them are tax deductible and understanding which ones are allowed and which ones aren't is very important to the life of the business.

The definition of what is tax deductible for your business includes anything that is `ordinary, necessary and reasonable' but many people have a tendency to blur the line as to what these things really are.The definition that the IRS provides about what is necessary or ordinary is anything that is helpful and appropriate for your business.For example, a computer is something that is almost essential to every business out there now and something like this would be considered a tax deduction.But if you are buying a computer that will be used mostly at home or for personal reasons, then the situation is very different.There are some things that are not allowed whether they are for the business or not.Many seem like no brainers, but some people try to write them off.They include things like bribes, traffic tickets, telephone bills and clothes that you wear to work unless it's actually a uniform that you wear.

A car is something that is very commonly used for business by a small business owner.There are basically two different methods to write of the expense of a car used at work, the standard mileage and the actual expense method.The standard mileage method is more commonly used and is much easier to calculate for most people.The standard mileage method just has you track the number of miles traveled and then allows a certain amount to be written off for each mile traveled for business.The amount set by the IRS effective in January 2009 is $.55 per mile.The rate varies depending on the guidelines set by the IRS.

Business related entertainment is something that small business owners frequently provide and wonder what is tax deductible.The general rule is that you can only deduct 50% of the cost of entertaining clients or customers for business purposes.This has changed as in previous years, you would write off 100% of entertainment expenses.Some of the things that qualify as business entertainment are taking a client to a sporting event or ball game, a concert, dinner at a nice restaurant or even having them over at your house for a BBQ on the weekend.One very important thing regarding entertainment expenses is that if you are audited, you are required to show proof of these expenses and also that it was directly or indirectly related to your business.Some events are eligible for 100% deduction and some of these are parties, picnics and other social events put on for your employees and their families.It is still important that you link this to a business goal and prove that it is really related to the business.Whether you are certain something can be written off on your taxes or not, you should always document what you spend very well and keep a detailed record of the money flowing in and out of your business.This will make it easier to keep track of your taxes and what you owe, but will also help you to run the business better in general.