Listen to my podcast Benefits of Hiring a Bookkeeper with Christine Matlock. This podcast was done by my long-time friend and coach, Ben Florsheim. To check out more of his podcasts click here.
When it comes to owning a small business, every dollar that you save can help grow your company. One of the easiest ways you can retain more of your revenue is with tax deductions. Also called tax write-offs by many, tax deductions help lower your tax liability (reduces your taxable income) and lessens your tax bill at the end of the year.
Determining what meets the IRS’s definition of a tax deduction isn’t as cut and dry as some may think, however. A Reno bookkeeper can help your small business manage your financial statements and organize your tax write-offs for maximum savings. Learn more about tax deductions below, and connect with a Reno bookkeeper from Prosperity Concierge for small business bookkeeping services that are customized to meet your needs.
As stated above, tax deductions lower your taxable income and, as a result, the amount of taxes owed. Deductions, or write-offs, are expenses that a business owner incurs over the course of the fiscal year that can then be applied against their gross income. Typically, tax deductions are expenses that have been made to produce additional income. These tax write-offs are essentially subtracted from your taxable income to determine how much tax will be owed at the end of the year. It’s important to note that tax deductions are subtracted from your income before you calculate your tax and are not subtracted directly from the taxes you owe.
The IRS has determined that tax deductions must be deemed as either ordinary or necessary for the functionality of your business in order for it to pass as a legitimate write-off. Let’s clear up some of the ambiguities of tax deductions.
An ordinary business expense is one that’s classified as being “common and accepted” in your industry. This may include advertisement expenses, purchasing common supplies, and business travel costs. A majority of businesses in any industry have these types of expenses, making them ordinary.
A necessary business expense is classified as being “helpful and appropriate” for your trade or business. These are expenses that need to be made for you to operate your business but aren’t essential for all businesses. Each industry has different needs, so what might be necessary for one business may not be necessary for another. For instance, if your business is related to the construction industry, you’ll likely have to purchase expensive heavy-equipment to operate accordingly, whereas a hairstylist needs shears and hot tools to do their day-to-day job. Each example is used to help boost profits in their respective industry’s but wouldn’t be an appropriate expense in a different industry.
Many business owners are worried about what the IRS considers to be a plausible tax deduction that they simply don’t record any deductibles and wind up owing much more on their taxes than they should. If you have a legitimate business expense, don’t be afraid to claim it for your taxes. If the expense is truly ordinary or necessary for your business then taking the deduction is worth it. To determine what qualifies as an ordinary or necessary business expense, ask yourself a few questions:
Christine Matlock, owner and founder of Prosperity Concierge, knows just how important accurate financial management is for your small business. As a small business owner herself, Christine has spent much of her time prioritizing financial recording for maximized earnings.
Christine is a local Reno bookkeeper and financial coach who’s proficient in handling business expenses, creating budgets, using QuickBooks, and developing financial confidence. See how she can help your business improve its bottom line!
In business, bookkeeping is the backbone of your entire accounting process. Utilizing bookkeeping services can help you make better operating, investing, and financing decisions so you can efficiently run your business and grow your company. Keeping a detailed record of your daily financial transactions, from income to business expenses, helps you stay organized and allows you to stay on top of your finances more easily. Knowing how important bookkeeping is, now’s a good time to learn more about the accounting process and how to properly manage your own books. Our Reno bookkeeper at Prosperity Concierge can help with that!
If bookkeeping is something you or your business is struggling with, be sure to connect with our experienced professional. Christine Matlock will provide you with the best bookkeeping services Reno, NV has to offer.
Bookkeeping serves two critical purposes: to properly record all business-related financial transactions and to communicate the results of those activities. This requires each and every financial transaction, whether it’s money coming in or going out, to be documented, sorted, and reviewed. While ensuring that transactions are accurately recorded is crucial, it’s just as important to interpret those results so that you can make adjustments in your business’ financial practices accordingly.
Bookkeeping is no simple task and having it done correctly is key to managing your finances. Proper bookkeeping requires a high attention to detail and a knack for organizing. This can take quite a bit of time away from other aspects of your business, which is why many companies are utilizing Reno bookkeeping services to help manage their finances.
Our Reno bookkeeper will help you analyze your current financial position, organize your books, and make sure all business transactions are up to date and accurate. Other than the obvious benefits this has, such as having full control and transparency of your finances, accurate bookkeeping provides many advantages.
For instance, you’re able to address potential problems early on mitigating the risk of creating further financial damage. It’s easy to fall behind on your books, but the quicker you can address an issue with your revenue or cash flow the better. Another way proper bookkeeping can safeguard your business is it helps ensure you stay compliant with tax obligations and other aspects of business law. Your company’s tax information depends on the accuracy of your financial books, so it’s crucial that they are always kept up-to-date. If your company relies on an investor to support your business, having clean, organized financial records can help secure their continual support.
Stop stressing about your finances and get expert Reno bookkeeping services with Prosperity Concierge today! We will help you make appropriate decisions with your money so you can reach your financial goals without complication. Schedule your free consultation with our trusted Reno bookkeeper below and take back the reins on your finances. We offer a comprehensive list of the best bookkeeping Reno has to offer. Our knowledgeable financial coaches are ready to help you. Connect with us today!