business-related expenses. A write off for a small business owner is any expense that’s ordinary and necessary for the operation of the business, Lopez explains. Items typically expensed are office equipment and business-related traveling expenses such as gasoline, airline tickets, hotel stays, meals, and rental cars.
Make estimated tax payments throughout the year. Estimated tax payments are made at the end of each quarter, which eliminates business owners having a large tax payment at the end of the year and any possible penalties associated with underpayment, Lopez says. “Work with your CPA at least quarterly. Don’t wait until tax season to get things in order,” he advises.
Filing estimated tax payments does three main things: It keeps small business owners in compliance with the IRS regulations. It also breaks down your liability into four payments, reducing the burden on the taxpayer. And if you calculate them correctly, it eliminates the business owner from coming up with a large payment at the end of the year when the taxes are completed and filed.
The American Recovery and Reinvestment Act of 2009, part of the stimulus package that President Barack Obama signed into law on Feb. 17, includes a number of incentives for small businesses such as tax credits for hiring certain categories of workers and the ability to spread business losses over more years and realize tax savings more quickly, according to IRS spokesman Eric Smith.