Is your new business keeping you too busy to worry about tax returns? Take two minutes to review these 10 tips for trimming your taxes:
1. Start-up costs. Deduct them as capital expenses over five years. Outlays after launching your business are current-year deductions (normal business expenses).
2. Interest. Did you borrow funds to get your business off the ground? Use credit cards to purchase equipment? Finance a company vehicle? Deduct all related interest and carrying charges.
3. Fees. Write off payments to accountants, attorneys, consultants, other business professionals.
4. Marketing. It's all deductible. Advertising, promotion, public relations--even business cards.
5. Car. Write it off--but only to the extent it's used for business. Your choice: 31.5 cents per business mile (this amount may change this year) or actual expenses related to business. Zero deductions for personal use.
6. Travel. Off on a sales trip, business meeting, convention, seminar? Deduct your plane fare, hotel, cabs, dry cleaning and half the cost of your meals--but no expenses for accompanying family members.
7. Entertainment. Treat clients or prospects to a night out and deduct half the bill if you discuss business.
8. Home office. If it's used regularly and exclusively as your principal place of business, you may deduct an appropriate proportion of mortgage interest, rent, real estate taxes, casualty losses, utilities, insurance, depreciation, painting and repairs.
9. Miscellaneous. Don't overlook incidentals such as telephone bills, answering service, professional journals and trade magazines, bank fees, association dues, health insurance premiums (45 percent on average), business insurance, fees and licenses.
10. Penalties. If you're penalized for underpayment, increase estimated tax payments this year; make sure they equal at least taxes paid for 1998.
Consult a tax professional to ensure the above information applies to you, or check out the new IRS Web site for small businesses (http://www.irs.ustreas.gov/prod/bus_info/index.html).