“I don’t know” is a phrase that few people will admit to saying. This can be due to fear, embarrassment, or the fear of not being able to answer a question. However, this phrase should not be taken negatively. In fact, it should be seen as liberating, as it is a way to cut through the clutter when you do not have an answer a gateway to learning what needs to be done for your business.
The March 15th deadline is approaching and businesses are paying attention to LAST YEARS financial results. In the episode, we discuss how Client Accounting Services (CAS) are essential for business owners to achiever their goals in the current year.
Entrepreneurs believe in sacrifice.
They sacrifice for clients, employees, and vendors and willing to overcome anything that might stand in the way of dreams.
The sacrifice mentality affects owners and their families because they do not consistently compensate themselves. With all the effort and perseverance needed to run a small business, a business owner must be able to maintain their livelihood and support their family’s needs, or eventually, the business will fold.
Be nice to yourself!
As an entrepreneur, when you ask somebody to work for you or perform a short-term task, compensation is expected. As an owner, you do five times the work of someone working with you, but never consider compensating themselves.
Business owners should be nicer to themselves; you find ways to pay every other bill and but you don’t find a way to pay yourself. if you are cognizant of paying someone else, why not look out for yourself?
I know it’s rough and sometimes it goes against conventional wisdom, but you have to be nice to yourself.
Start with this Habit
My advice for business owners is to build a habit of paying yourself, even if only $100 or $50 per pay period. As revenues grow, your paycheck can be increased, and you will make enough to take care of yourself, possibly even pay yourself a bonus.
Look at it this way – flight attendants tell passengers to put their masks on BEFORE assisting someone else if cabin pressure drops. In other words, we have to care for ourselves before we care for others.
Being a founder, leader, CEO or boss are all positions where sacrifice is necessary – but if the owner/founder does not take care of themselves the business may not be around for the long term.
Photo by Solo Shutter from StockSnap
Business expenses are the cost of carrying on a trade or business, and there may be some tax breaks there. But a lot has changed in recent months, and the rules can be complicated.
Are there business deductions you can take advantage of? Yes, but first you have to make sure your expenses are truly business-related. The lines can blur, especially with a small business, because you generally cannot deduct personal, living or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts, and then deduct the business part.
An example: You borrow money and use 70% of it for business and the other 30% for a family vacation. You can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and isn’t deductible.
Let’s look at business use of your car and your home:
- Business use of your car: If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage.
- Business use of your home: If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses include mortgage interest, insurance, utilities, repairs and depreciation.
Other types of business expenses? Let’s take a closer look:
- Employees’ pay: You can generally deduct the pay you give your employees for the services they perform for your business.
Retirement plans: These are savings plans that offer you tax advantages to set aside money for your own, and your employees’, retirements.
- Rent expense: Rent is any amount you pay for the use of property you don’t own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
- Interest: Business interest expense is an amount charged for the use of money you borrowed for business activities.
Taxes: You can deduct various federal, state, local and foreign taxes directly attributable to your trade or business as business expenses.
- Insurance: Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business or profession.
This list is not inclusive but endeavors to offer some common business expenses and explains what is and isn’t deductible. Of course, in some cases, expenses might need to be amortized — deducted over a period of several years — if they are startup costs or if they’re related to the purchase of business equipment.
You must capitalize, rather than deduct, some costs that are part of your investment in your business — these are called capital expenses. Capital expenses are considered assets in your business.
Of course, some business deductions can be very complex, so professional advice is necessary to make sure you’re getting what you’re owed without raising any red flags with the IRS. We’re here to help you with your business tax needs.