When you say "end of the year," most small business owners
think of two things immediately. The *second* is the holidays. The
*first* is taxes! While almost all of us pay taxes quarterly, we
still have to file in January. That means November and December are
spent getting ready. When you're gathering all your information together
for your accountant, don't forget about these regularly overlooked
deductions.
Mileage
Sure, most of us already know that we can deduct a mileage allowance
from our taxes. However, many of us (especially dot coms who don't
travel much) don't bother to keep track of our travels thinking
it won't be worth the trouble. Oh, but it is!
I had the same mind-set, but - at the urging of my accountant
- decided to keep track and see for myself. I'll never neglect
to do it again! Even though almost every place that I travel is
nearby, when I added up all the 10-mile trips to the office supply
store, the bank, etc., it turned out to be a hefty total. Haven't
kept track this year? Start now.
Go back and look for deposits in your check register. This would
have meant you traveled to the bank on that date... write it down.
Do you have receipts from the office supply store? You must have
traveled on that day, too. Write that down. Keep all your information
on a log sheet with the date, number of miles traveled round trip,
and the purpose of the drive (i.e., office supply store, bank deposit,
etc.). You'll be pleased to find that even short, weekly trips
all throughout the year can add up to 800 - 1,000 miles or more.
Multiply that times the 2002 allowance of 36.5 cents per mile and
you get a $292 - $365 tax deduction!
Bad Debt
Did you sell products or services to someone who did not pay you?
Have you tried to collect the money without success? You can write
those losses off and get a deduction for them. No, it won't equal
the total amount of the money you lost, but it is better than nothing.
Simply gather the information about the sale, the invoice you
submitted to the customer, and documentation of your attempts to
collect the amount owed. You do not have to file bad debt deductions
in the same year they occurred, so if you have old losses, gather
the information now so you can include it on your 2002 return.
Travel
Almost any trip can become a business trip if you plan it right.
Even if you're traveling to your 20-year high school reunion, you
can write off your travel expenses IF you play your cards right.
While mingling with your old chums, collect some business cards,
and hand out a few of your own. Ask people what they do for a living
(in tax talk that relates to "market research"), and
set up a phone call or two for when you return home.
I know one woman who took a pleasure trip to England. However,
while she was there, she took tons of pictures of museums, landscapes,
etc. She gathered brochures and picked up some information from
a few local vendors. She used these things to justify her trip
as business travel for her set design (theater) company.
No, you don't have to spend the entire trip talking/doing business.
Just be able to document that you did some business while you were
there. You can also take deductions for lodging and meals while
you're on your trip so save your receipts!
As you can see, there are many tax deductions available to you.
To find out about more, set up a "pre-tax" appointment
with your accountant or tax pro. They can give you information
on additional tax deductions that might apply to your particular
industry. When you add up all the small stuff, you can end up with
some major tax savings!
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Diane Hughes is an accomplished Internet entrepreneur and editor of the popular
ProBizTips Newsletter. Subscribe to her newsletter for more tips, tricks,
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