Here in Atlanta and across the country, the new year means it’s time to start filing tax returns. For small businesses, this can be a bit more complicated than the average single or married tax return. Luckily, there are many resources for small business tax help; if you’re stuck with your tax filing, businesses like NTRC Tax and Finance can help you. Let’s take a look at some of the most commonly asked small business tax questions.
Atlanta Small Business Tax Questions:
How Should My Employees Be Classified?
When you go to report your small business’s taxes, you’ll come across a question that asks you to describe and classify what type of employees you hire. Depending on how you use the services of that employee, you may need to classify an individual as an independent contractor. When you take a look at each employee, ask yourself what the business arrangement looks like: do you have direct control over how the worker does their job? If so, that individual is a traditional employee.
If, on the other hand, this individual works for you on a project basis – and the details of how the job gets done are up to them – you have hired an independent contractor. It is very important that you notate the types of employees you hire because this will greatly impact your taxes. If workers are misclassified, you may end up owing taxes or be fined a penalty.
How Does a Side Gig Affect My Taxes?
While your small business brings in the lion’s share of your yearly profits, your side gig may also produce enough money to be claimed on your taxes. As a general rule of thumb, you should report any and all additional income that you procure during the year – even if it’s just $1000. It’s better to take the time to report that small amount than have the IRS audit you because that means you’ll be going back through every single document.
When it comes to side gigs, that income will be reported as self-employed freelancing income; this will differ slightly from and be separate from your small business income.
What Expenses Can I Deduct as a Small Business?
Work through the following list; if your small business fits any of the requirements, you’ll be able to use that deduction. If you have any questions about whether or not your Atlanta small business qualifies for a certain deduction, feel free to contact the team at NTRC Tax and Finance.
- Travel Expenses and Vehicle Expenses
- Home Office Expenses
- Self-Imployed Insurance Expenses
- Business Startup Expenses
- Expenses of Goods and Materials
- Employee Benefit Expenses
- Tax Expenses
- Retirement Contributions
- Contracted Labor Expenses
- Half of Your Self-Employment Taxes
- Bad Debts
- Professional Dues and Subscription Expenses
- Depreciation of Business Assets
- Internet, Phone, and More
How Do I Deduct My Business Assets?
Especially during the 2020 and 2021 tax years, bonus depreciation was extremely beneficial to small businesses (bonus depreciation was set to 100%). There are two ways that your small business can deduct assets: over time and up-front (bonus depreciation). When you deduct the asset up-front, you can claim a loss. This is very helpful since there usually is a loss for the year your business makes a major purchase. When you deduct an asset over time, you’ll spread that loss out over time. How you choose to deduct that asset is up to you.
How Should I Be Saving for Retirement as a Small Business Owner?
There are many options, so selecting the best retirement plan will be subjective and highly individualized. However, you can always discuss your retirement options with your financial advisor. The following are a few of your options:
- 401K Plan
- Traditional or Roth IRA
- Simple IRA
- SEP IRA
Small Business Tax Questions & Tax Help in Atlanta
Do you have small business tax help questions? Here at NTRC Tax and Finance, we are tax experts, routinely helping Atlanta small businesses with their tax questions and financial advice. Let’s work together to get your small business taxes done!