Part 3 of 3
Starting your own small business could lead to great benefits when you file your taxes next year. Owning a small business positions you to take advantage of some great tax benefits. These benefits will help you this year and serve to reduce your tax liability on an annual basis.
This is the perfect time to officially start your small business.
Forming a small business is very simple, and many people can do it on their own. There are 3 key steps you’ll need to take to form your business:
1. Create a limited liability company (LLC) with the Secretary of State. In Oklahoma, and most states, this can be done online for a fee of $100.
2. Obtain a tax ID number for the new legal entity with the IRS. This can also be done online at using the IRS website (www.irs.gov).
3. File the tax elections to have your new LLC taxed as a pass-through entity that best aligns with your business. The related forms (form 8832 or form 2553) are available for free on the IRS website (www.irs.gov).
While many clients can do this work independently, it’s always our recommendation to get a professional plugged in to ensure you set everything up correctly. Contact us if you would like to get us plugged in to help you. We offer a SmartStart program that can help you with your set up, or even complete the entire process for you. And the good part, the costs associated with this set up are 100% tax deductible.
Creating a formal business is a great option for individuals who are involved in multi-level marketing businesses who are earning some commissions. This structure will allow you to take advantage of a long list of deductions that you may otherwise not qualify for. The five most common deductions are listed below, and there are even more that you can take advantage of by establishing your own business.
- The New Small deduction equal to 20% of your business’s net taxable profit
- Nearly every small business will qualify for this tax cut just by being a small business
- Start-up Costs
- This includes LLC filing fees and professional fees to create your business
- Business Use of Personal Vehicle
- Miles driven to conduct business are deductible at 54.5 cents per mile in 2018
- Business Use of Personal Cell Phone
- If your cell phone is used to conduct business, you can deduct a % of each month’s bill
- Home Office Deduction
- Doing work from home? Your home office, and a % of all home expenses are deductible