The Holidays are past, the New Year still in diapers; the next hurdle to overcome the computation of TAXES. At this time of year the public is inundated with tax articles, tax deductions, “How to do” taxes, scaring people into believing bad things will engulf them. I recall watching my father do the family taxes without any groans or wads of paper and even though I did not fully understand what he did, what all the forms were for, or even why he mailed a check with them each year his patience and determination planted a seed. When the time came to do my taxes that seed blossomed into patience, resolve, and enthusiasm in achieving a task few enjoy. The love of research, digging into information, books, publications and coming away with the necessary facts and bottom line results; all of this heart pounding adrenaline is exhilarating like hiking on a winter’s morning!
Four years ago I went into partnership and started a small business and, being of sound mind and body, elected to do the taxes. The leap from personal to business taxes is like an Evel Knievel jump daring, tricky, and wrought with danger but I forge ahead learning along the way. At first I waited too long ending up gathering information at the last minute barely making the deadline however, this year is my finest hour or day, or week whatever as I finally awoke and started sooner discovering hidden deductions. One such, the use of a car in business and before the “Duh” come out our business does not include deliveries or such and of course the daily commute is not deductible. Occasionally (here is the discovery), merchandise from a local distributer is picked up before heading into the shop so the distance between the two is deductible. Repairs, insurance, registration, maintenance, etc. are additional deductions if you feel there isn’t enough paperwork but I choose the path of least resistance: the standard mileage rate for the accumulated mileage from the distributor. Two methods exist if setting up a portion of your home as an office one, allows for depreciation of the house, part of the mortgage and insurance can be included as well as repairs to the office portion, even some of the utilities. A second version, the simple method, gives a deduction based on the square footage of the room used times $5.00 A common stipulation: the room can only be used as an office, no exercising, family gatherings, popcorn eating, Downton Abbey watching nothing but work related to the business!
Another discovery the Estimated Tax which small businesses pay if expecting to owe a certain amount after applied withholdings and credits from wages. Here my patience is tested as I don’t understand this even after numerous rereads of the instructions, worksheets, and tax rates based on percentages but will keep hammering away until I make sense of this as if a snow plow trying to break through a huge pile of the white stuff.
Whether for personal or small business taxes are a challenge and one I don’t mind undertaking for once the forms are filled, sealed in an envelope, stamped and dropped in the box a sense of accomplishment and patriotic duty overcomes. I wonder if my father would agree.