February 2013 - Amy Northard, CPA - The Accountant for Creatives®

Standard Mileage Deduction

Posted by | Tax Tips | One Comment

auto expenseEver use your car for business purposes? You can probably deduct some of the expense on your tax return!

There are two methods for deducting auto expenses.
Method 1: Actual expenses (gas, repairs, maintenance, etc)
Method 2: Standard mileage deduction (see below)

Today, we’re going to focus on the 2nd method and how it applies to self-employed entrepreneurs.

First off, if you want to use the standard mileage deduction, you must use it in the first year the car is used in the business. If you use actual expenses in the first year, you can’t use the standard mileage deduction in the 2nd year.

If your main place of business is your home office, you can deduct the mileage from your home to your clients. Just be sure to record each and every trip. I suggest keeping a log in your car or purse.  It needs to record the following pieces of information:
-Date of trip
-Purpose of trip
-Starting and ending location
-Total miles (round trip)

Resource: IRS Publication 463

Just getting started?

Posted by | General Business Tips | No Comments

how to start a small businessNow that you’ve got your business idea nailed down, don’t let the accounting and tax side get you stuck in a feeling of being overwhelmed and defeated. Follow these 4 steps to get you started:

  1. Decide what business structure you will need.
    Sole proprietorship, partnership, LLC, S-corp? I will go in depth on each of these topics in the future, but for now, a quick Google search will tell you everything you need to know.
  2. Know what you’ll use for your Federal ID Number.
    If you’re a sole proprietor,. you can use your social security number. If you are going to operate under any other business structure, you’ll need an EIN number. Go to IRS.org and you can get an EIN in minutes.
  3. Look at your state’s tax website to determine what paperwork must be filed.
    You may need to register your business with your state. Their website should have a section for small businesses and what needs to be filed. When in doubt, call them. They’re usually pretty nice.
  4. Organize organize organize.
    Keep all receipts, invoices, bills, etc. in an envelope for each month. Once that month is over, you can grab your envelope and update your bookkeeping. Don’t let everything pile up in a big box for an entire year, or come this time next year, you’ll be sorry!

If this list is still leaving you overwhelmed, take it one step at a time. Don’t feel like you need to have everything done right now. It’s not possible and will only stress you out.

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