How to Start a Carwash: Four tax code changes you should know - Professional Carwashing & Detailing

How to Start a Carwash: Four tax code changes you should know

Small businesses can take advantage of some tax changes new for 2015.

According to a survey, “taxes are the number one issue facing small business,” notes Entrepreneur magazine. Tax rules are complicated, and changes to them make it even more confusing for small business owners. Below are four modifications to help you navigate tax season.

Claim small business health care credit

Small businesses that offer employees health insurance, states the article, could qualify for tax credits. In 2014, the maximum credit increases to 50 percent of premiums paid, or 25 percent for tax exempt employers.

The fine print: The credit can be claimed only for two consecutive years, reports the article. The business also has to purchase coverage through the SHOP Marketplace for small business. “To qualify for the credit, the employer must also cover at least 50 percent of the premium and the business must have no more than 25 employees with an average salary of less than or equal to $50,000,” says the article.

Capitalize on latest tax extenders

The Tax Increase Prevention Act of 2014, passed in December of last year, extended more than 50 tax breaks, including:

  • Sec. 179 expensing: Owners who made capital purchases should take note of this. “For 2014, dollar limits for Sec. 179 expensing are at $500,000, with an investment ceiling of $2 million,” notes the article. “This means small-business owners can deduct the full cost of up to $500,000 on most depreciable assets that have less than a 20-year life, such as new or used computer equipment, vehicles, furniture and more.”
  • Bonus depreciation: This credit can be more valuable than Sec. 179 because bonus depreciation is not limited to business taxable income with any excess carried forward, shares the article. “With 50 percent bonus depreciation, a company can deduct half the cost of new capital purchases in the first year.”

Understand deductible expenses

Ordinary and necessary expenses can be deducted, states the article. “If you have an item that is used for personal and business purposes, you can allocate the expense and deduct the business portion.”

The IRS has introduced a simpler way to determine the deduction for using your home for business, says the article. There is also a $5,000 write-off for startup expenses.

Properly classify your workers

Steep penalties are levied for incorrect classification of workers, according to the article. Resist claiming employees as independent contractors to save money.

Click here to read the entire article.

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