How to Keep Good Records for the Next Filing Season for Small Businesses

Tax season can be a challenge for self-employed individuals, but it’s also an opportunity to save money by leveraging deductions. Unfortunately, many people overlook key expenses that could significantly reduce their tax bill. Here’s a quick guide to the top 10 commonly missed tax deductions: Retirement Plan Contributions: Contributions to SEP-IRAs, SIMPLE IRAs, and solo 401(k)s are tax-deductible. Tax-deferred growth helps you build a stronger financial future while reducing your current taxable income. Self-Employment Tax: You pay the full 15.3% Social Security and Medicare tax as a self-employed person. Deducting half of this tax aligns your tax burden closer to that of traditional employees. Home Office Expenses: Deduct a portion of your rent, mortgage, utilities, and insurance if you use a part of your home exclusively for business. Use the simplified method to calculate your deduction or opt for actual expenses if they’re higher. Health Insurance Premiums: Deduct premiums for health, dental, and long-term care insurance for yourself, your spouse, and dependents under 27. This deduction applies even if you don’t itemize your deductions on your tax return. Internet and Phone Bills: Deduct the business portion of your phone and internet expenses. Ensure you separate personal and business use to avoid IRS scrutiny. Meals: Deduct 50% of meals for business purposes, such as client meetings, conferences, or travel. Meals must be reasonable and not considered extravagant to qualify as deductible. Office Supplies: Items like pens, paper, printer ink, and other business essentials are fully deductible. Don’t forget to deduct larger office equipment like desks, chairs, or computers if used solely for business. Marketing and Advertising: Deduct the full cost of promoting your business, such as website hosting, social media ads, and printed materials. Costs related to branding, like logo design or promotional items, are also deductible. Professional Services: Costs for accountants, lawyers, consultants, or other professional services are fully deductible. Fees for tax preparation software or financial advisors can also qualify as deductions. Travel Expenses: Deduct costs like airfare, lodging, car rentals, and meals for business-related travel. Parking fees, tolls, and transportation to and from meetings or the airport can also be deducted.  Why You Should Hire a Bookkeeper: Keeping track of expenses and deductions can be overwhelming. Hiring a bookkeeper provides: Maximized Deductions: Ensures you claim every eligible expense Time Savings: Lets you focus on running your business while they handle the details. Accuracy: Reduces errors and the risk of audits. Financial Insights: Helps you better understand and plan your finances. Bonus Tip: The cost of hiring a bookkeeper is a deductible business expense! . Final Thoughts Navigating taxes as a self-employed individual doesn’t have to be stressful or overwhelming. By staying informed about commonly missed deductions and maintaining accurate records, you can significantly reduce your tax burden and keep more of your hard-earned money. At Keep-On-Booking, I help take the guesswork out of your finances. From payroll management to tax filing and financial reporting, my services are designed to save you time and money while you focus on growing your business. Contact me today for a consultation: https://www.keep-on-booking.com/consultation

As a Colorado business owner, one of the most important decisions you’ll make is how to classify the people who work for you. Are they employees or independent contractors? Properly classifying your workers in line with Colorado's laws is crucial, as it affects everything from wages and benefits to tax responsibilities. This blog will walk you through the key differences between employees and independent contractors in Colorado, the protections each group is entitled to, and the consequences of misclassification. Whether you’re starting a new venture or managing an established business, getting worker classification right is essential for staying compliant and protecting your business. Employees: Wages and Hours: Colorado employees are entitled to at least the state minimum wage, which adjusts annually. They are also covered by the Fair Labor Standards Act (FLSA), which requires overtime pay at 1.5 times the regular rate for any hours worked over 40 in a week. Benefits and Protections: Employees have access to a range of benefits such as unemployment insurance, workers’ compensation, and health benefits. Additionally, they are protected from workplace discrimination, unsafe working conditions, and wage theft under both federal and state law. Legal Recourse: If their rights are violated, employees can file complaints with the Colorado Division of Labor Standards and Statistics. These violations could include unpaid wages, workplace safety issues, or employment discrimination. Independent Contractors: Flexibility: Independent contractors in Colorado typically enjoy more freedom in choosing their working hours and methods for completing tasks, allowing for greater flexibility in their work-life balance. Limited Protections: Unlike employees, independent contractors aren’t entitled to minimum wage, overtime pay, or benefits such as unemployment insurance and workers' compensation. They also aren’t covered under most employment discrimination laws. Tax Responsibilities: Independent contractors must manage their own taxes, including self-employment tax, and are responsible for covering their own benefits, insurance, and retirement savings. The Importance of Proper Classification In Colorado, workers are generally presumed to be employees unless proven otherwise. If an employer wants to classify someone as an independent contractor, they must demonstrate that the worker is: Free from the employer’s direction and control in performing their work; and Engaged in an independent business or profession related to the work they perform for the employer. Employers cannot rely solely on issuing a 1099 form to classify someone as a contractor. A written contract is required, outlining key elements like the contractor's obligation to handle their own taxes and the fact that they won’t receive unemployment insurance unless they or another entity provide coverage. Key Factors to Determine Worker Classification Colorado uses a variety of factors to assess whether a worker is an employee or an independent contractor. These factors include: Control Over Work: If the employer dictates how, when, and where the work is done, the worker is more likely an employee. Nature of the Work: If the worker performs tasks integral to the employer’s core business, they are probably an employee. Payment Method: Employees are generally paid by the hour or on a salary, while independent contractors are paid per project or job. Tools and Equipment: Employees often use tools and equipment provided by the employer, whereas independent contractors provide their own. Consequences of Misclassification Misclassifying an employee as an independent contractor to avoid paying overtime, unemployment taxes, and other benefits can lead to serious penalties. Businesses found in violation could face: Back pay for unpaid wages and overtime Fines and penalties Back taxes for unemployment insurance and other withheld benefits Proper classification of workers is essential to avoid legal and financial repercussions. Colorado’s Division of Labor Standards and Statistics can investigate claims of misclassification, and violations can be made public under the state’s Wage Theft Transparency Act. Get Professional Help For small business owners, navigating these complex classifications and ensuring compliance can be overwhelming. By hiring professional bookkeeping services, you can ensure accurate worker classification, maintain compliance with employment laws, and avoid costly penalties. Keep-On-Booking's expertise in payroll management, tax filing, and financial reporting allows you to focus on growing your business with confidence and peace of mind. Contact us today to learn more: https://www.keep-on-booking.com/consultation