It’s tax season, which means among other things, stress! In Mike D’Avolio’s recent article for Entrepreneur, he discusses the 4 tax code changes that small-business owners need to know about. “Taxes are the number-one issue facing small businesses, according to December’s Small Business Optimism survey. As we’re now in tax season, small-business owners face the additional headache of understanding how new changes to the tax code affect their businesses.” Here are the changes he references (for full text, click here).
1. Claim small business health care credit.
While certain provisions of the Affordable Care Act don’t take effect until 2015, small businesses — including tax-exempt employers — that offer health insurance (Form 8941) to employees could qualify for a tax credit to help with the cost of providing coverage for low- and moderate-income workers.
2. Capitalize on latest tax extenders
In December, Congress passed the “Tax Increase Prevention Act of 2014,” which extended more than 50 tax breaks for individuals and small businesses. These include two important tax breaks for small businesses.
3. Understand deductable expenses
The tax code allows a small business to deduct the costs of running a business, as long as the expenses are ordinary and necessary. If you have an item that is used for personal and business purposes, you can allocate the expense and deduct the business portion.
4. Properly classify your workers.
It could be tempting to classify an employee as an independent contractor because of the cost savings, but take caution. There are strict rules surrounding the proper classification of a worker, and steep penalties for failing to apply the law correctly.