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Important Questions Business Owners Should Ask Tax Consultants

Tax returns must be filed each year by all businesses. Tax filing refers to calculating how much your business owes to the government and how much is deductible from those taxes. 

We’ve compiled a list of the ten most important tax questions business owners should ask tax consultants. Tax filing can be done in different ways. Depending on your workforce, benefits offered, and business expenses, your approach may differ, but we at SCL Tax Services In & Near Bronx, NY recommend consulting with tax advisors before making any decisions.

A business owner in Bronx, New York consulting a tax consultant

  1. Can I Use My Business to Pay For My Personal Expenses?

    Yes, you can. Just keep a few things in mind.

    Many people use their company credit cards to pay for their vape pens, vet bills, spa days, and anything you can think of. And it’s perfectly fine to do so. However, not all of these expenses can be written off from a tax perspective since they do not qualify as business expenses.

    Any ordinary and necessary expense related to your business can qualify as a business expense, such as your desk or laptop.

    What else should you keep in mind? Your investors and partners might have a hard time understanding why you’re spending team money on things like getting a pedicure.

    When you’re a sole proprietor, things are a bit different. If you’re the only owner, you’re less likely to be glared at for using your company for personal expenses. But when everything is muddled together, it can be hard to keep track of your business finances.

    Our tax consultants suggest keeping the business and personal expenses in entirely separate courts.

  2. Is My Gym Membership Tax-Deductible?

    One of the good tax questions business owners usually ask our bookkeepers is this: “is gym membership tax-deductible?”

    The answer is No. You cannot deduct personal gym memberships. As we discussed above, these expenses are considered personal expenses and should, ideally, be paid from your personal account rather than your business account.

    However, if you build a private gym within your business location that is open to all employees (but not the public), the costs of the gym could be tax-deductible.

  3. Why Does My Bank Account Balance Not Match up with My Income Statement?

    Many people get confused when they see their income statement doesn’t match their balance sheet. This is because it shouldn’t.

    Net income is an expression of activity, not of position. Here are the differences:

    Balance sheet: It shows your current position and a snapshot of your business at a particular point in time. In other words, if your business was liquidated today, this would be what you would still have left in cash.

    Income statement: This shows a summary of expenditures over a specific period. This sheet will show how much revenue you made or how much expenses rose because more employees were hired.

  4. Are Home Office Expenses Deductible?

    There was a time when claiming home office expenses was considered risky, as they could raise red flags with the IRS. As a result, many people used to claim excessive amounts for their “home office” when in reality, it was just a room at home that was used on occasion for office tasks.

    Now on the other hand, home offices have become increasingly common among freelancers, bookkeepers, and business owners due to the growth of remote and home-based working. As long as you regularly use a part of your house as your office, then you may be able to claim expenses related to it. According to IRS guidelines, the office must qualify as your principal place of business. Even so, you can meet with clients outside this office and conduct some business away from the office.

  5. Is Employee Health Coverage Reimbursable?  If you do not offer your employees health benefits, then one of the good tax questions is whether employees can be reimbursed for their insurance expenses or not. Repaying your employees’ health care is not only illegal, but it is also punishable with up to $100 per employee per day of reimbursement. You can, however, factor health care into your employees’ salaries to help them cover the costs.
  6. What Tax Forms Should I Fill Out For Business Taxes?

    If you’re filing taxes for your business for the first time, you need to know what forms to fill out. The forms you should fill depend on what kind of business you have.

    For sole proprietors and single-member LLCs, complete Schedule C and submit it along with Form 1040 (your personal tax form). Alternatively, if you are a part of a partnership or an LLC with multiple members, then you must file Form 1065 (a partnership return) and Schedule K-1.

  7. When Should I File My Business Taxes?

    Just thinking of tax filing or the IRS makes you sweat? It’s not just you. You should not use this as an excuse to procrastinate or remain disorganized when it comes to the IRS. Rather than putting off the inevitable, proper planning and organization are crucial to tax preparation.

    If you’ve ever visited a tax questions forum, you’re likely to have seen that the tax deadlines are one of the more common questions.

    For business taxes, the deadline is the same as for personal taxes, April 15. In the event that the 15th falls on a weekend or a legal holiday, the due date is delayed to the first working day following the 15th. Partnerships must file 1065 forms earlier than individuals and by March 16. In addition, if you are a multi-member LLC filing as a partnership, you must also file Form 1065 by April 15.

    a business owner asking business tax question in Bronx, NY

  8. What’s the Difference Between Sole Proprietor and Being Self-Employed?

    As far as taxes are concerned, being a sole proprietor and being self-employed is basically the same. A sole proprietorship is not a legal entity, so the steps for filing income are the same as if you were self-employed or a freelancer.

  9. Are Client Gifts Tax-Deductible?

    As a business owner, you might wonder, like many other business owners, whether gifts you give to clients are tax-deductible?
    The short answer is yes. There is, however, a limit of $25 per client for the tax year. Although you can spend whatever you like on client gifts, you can only deduct 25 dollars from each client.

  10. Is My SSN Enough for Tax Filing, or Do I Need an EIN?

    A company’s Employer Identification Number (EIN) is similar to its Social Security Number (SSN). A business registering for an EIN receives a unique identification number almost exclusively used by the IRS and banks for tax purposes.
    You can file your business tax return using your SSN and skip applying for an EIN if you are a sole proprietor and do not have employees or freelancers on board. You will also need an EIN to file your taxes if you own LLCs, S-corps, and C-corps. You can apply for an EIN online if you don’t have one.

As a business owner, you may encounter so many other tax questions. Our tax professionals in SCL Tax Services have been helping taxpayers in and near Bronx, NY, with these questions. We can help if you need an accountant, tax preparation, or any other tax help services. So fill the form below or Contact our tax office in Bronx, NY  for a free tax consultation.

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