As a Dallas small business owner, you are constantly shelling out money, and the lines between personal expenses and business expenses are often blurred. Finding personal expenses that convert to business expenses is the key to maximizing tax savings and tax write-offs.

What does it mean to convert personal expenses to business expenses?

The IRS allows small business owners to file deductions for any personal expenses that are incurred in the interest of generating income (Internal Revenue Code Section 62). These items can vary from business owner to business owner, but keeping close tabs on your expenses and how you are spending money will help you determine what those costs are for you.

 

Think “Above the Line”

Every tax return is determined based on a simple number: your Adjusted Gross Income. Your goal is to assess what personal expenses you have incurred on behalf of your business that can be applied to the Adjusted Gross Income, expenses above and beyond the Adjusted Gross Income line. Every dollar that can be linked to your business is more money back in your pocket.

 

What costs are covered?

There is no hard and fast rule for what is covered across the board for each small business owner. Examples of covered expenses could include home office expenses, technology costs, client entertainment, travel expenses, etc. Work closely with your Dallas accounting team to determine what is eligible for deduction.

 

Make Changes Now; Reap Tax Benefits

It is not too late to adjust the way you spend for 2016 in order to reap greater tax benefits next year. Consider each purchase and whether or not it can apply to your business as well. Keep close records of each and every purchase, take notes on travel and client entertainment, and record any information that could be useful for an expense you plan to file as a business deduction. These records will prove invaluable should an audit ever take place.

 

Need help maximizing tax savings for your small business? Outsource your accounting needs to NexGen Finance Solutions in Dallas, Texas. Bryan Polozola and his team are experts in finance and accounting, ensuring you will receive the care your company demands. Call us today at 214-629-0100 or email bryan@nexgenfinance.com.