Pasadena’s Figco Offers a Personal Approach to our Business Tax Preparation Services

Business tax preparation is one of the most important ways you can benefit your business, and we at Figueroa & Co. in Pasadena know how to help you prepare your tax so that you benefit the most. Our personalized financial expertise not only assists your business to expand but also to be successful and go from strength to strength.

Some of us who own and operate businesses are not always sure what tax entitlements are when it comes to certain aspects of our businesses. However, if you prepare your tax sufficiently, you will be able to make some gains with the use of your vehicle, going on business trips and healthy insurance.

Automobile Use

If you own an automobile and you use it for business, you might be eligible for a tax deduction which will reduce your income tax. This all depends how much you use your auto for business purposes. If you keep it on your business premises and use it 100 percent of the time while at work then you will not be eligible for any deductions in tax.

There are two methods you can use to compute your auto deductions

These methods use:

  • The standard mileage rate.
  • Your actual expenses.

These two methods can be used if you personally own or simply lease your auto. Taxpayers who prefer to make use of the standard mileage rate method and not the actual expenses for calculating deductible auto expenses must opt to use that method in the 1st year. Changing over to using the standard mileage method in another year is not permitted.

The expenses method is not too difficult to understand as the actual expenses include the cost of oil, gas, insurance, tires, repairs, maintenance, washing, depreciation and licensing or the lease payments.

The standard mileage rate is somewhat different, as you have to record the actual mileage that was related to your business. From this total you use the mileage rate that was set for that year (55.5 cents per mile in 2012)

As the calculations are to be made on a annual basis, you will have to maintain accurate records which will indicate:

  • Miles used for business purposes.
  • Business use dates.
  • Business destinations.
  • Business purpose.

The IRS maintains high standards and will require that odometer readings are recorded at the start and finish of the year. If you fail to record the data accurately and are unable to prove your usage then you may not be allowed to make deductions for business mileage. Also, unless you have a home based office, you cannot include the mileage used going to and from work and home.

Attendance at Conventions and Business Meetings

As well as your business benefiting from lawful car use, it can also gain from attendance at conventions and business meetings situated out of your normal business area. Sometimes these events are a combination of business and pleasure, so to be able to deduct your business expenses you will need to keep accurate records. For example, if your business meeting only involved business activities for the whole time then you should be eligible to deduct all your transportation expenses from your tax bill.

Business transportation expenses are an exception but hotel and meal bills can only be deducted on business days. The later allowance is limited to 50% of the cost.

There are some limitations when attending shareholder meetings yearly, or when on a cruise or going to a resort. Travelling abroad is also treated separately. For elaboration of these areas, consult Figueroa & Co, your passionate business tax preparation professionals right here in Pasadena.

Health Insurance Deductions

There are some groups of people who are able to claim a self-employed health insurance deduction and they are:

  • All sole-proprietors and small businesses who report their income using Schedule C.
  • Farmers who report their income using Schedule F.
  • Partners in a partnership who are self employed.
  • Employees in an S Corporation who personally own 2% + of the S corporation’s stock.

However, the total of the premium for the health insurance which the company pays has to be included as taxable income in Box 1 of the employee’s/shareholder’s W-2, however the health insurance component does not attract to Medicare and Social Security Tax.

Many people who run businesses, especially in the smaller business community, do not always know what the IRS has to offer us. However, what should be remembered is that once we have paid our yearly tax bill and then discover that we could have deducted some of our expenses from it before sending it through to the IRS, it’s far more difficult to extract money later than it is to understand and fill in the correct information in the first place.

Often, it is better to pay for the services of a tax professional such as Figueroa & Co. in Pasadena who always keep up to date on business tax prep services information and their compassionate and caring attitude ensure you get the tax benefits that are your entitlements. In these difficult economic times all businesses need to ensure that they take advantage of all the tax concessions made available to them. These extras could be determining factors in the ongoing success of our businesses.