Tax Savings Tips for the Self-Employed

Tax Savings Tips for the Self-Employed

• Employ spouse and deduct medical expenses for entire family including sole proprietor [medical insurance policy must be spouse's (i.e. employee's) name]
• Employ spouse and deduct fringe benefits
• Contribute to SEP/Keogh/SIMPLE as well as an IRA and increase deductible contributions
• Employ your child and save on Social Security taxes (child under age 18)
• Employ your child and shift income to a lower tax bracket
• Maintain a qualified home-office and deduct all mileage
• Maintain a qualified home-office and deduct otherwise nondeductible home expenses
• Convert nondeductible hobby losses into deductible business losses by operating the activity in a business- like manner
• Follow IRC Sec. 530 rules to keep payroll costs down by treating workers as independent contractors
• Reduce self-employment tax by converting business into a S corporation
• Deduct fringe benefits by converting business into a C corporation
• Turn charitable contributions into business deductions by giving money to charities in exchange for advertisement
• Turn nondeductible vacation expenses into deductible business travel expenses by conducting a certain amount of business while on vacation
• Keep a separate bank account for the business and identify the source of a deposit as business receipts, loans, gifts, personal, etc. Careful records will avoid loans, gifts and personal money deposits being reclassified as self-employment income
• Keep a credit card strictly for business use. Fees and interest will then be deductible.
• Keep records of business income and deductions for at least six years after the tax return is filed and copies of business tax returns forever.

Please contact this office for details and assistance with any or all of the above.  We can guide you and relieve the tedious attention to detail so you can do what you do best.