I have a single member LLC. I know it's a complex topic but I would like to know how to better maximize my deductions and save on taxes.
For example:
- how to know if a business expense is a write off or not?
-is it better to lower my taxable income through investing the money I made that year into my own business or contributing in a retirement account . How do I calculate how much should I invest/contribute at the end of the year to save on taxes?
Other than general advice I would like to know if there is any book, video, course, or any kind of resource that could help me to learn more about it.
Thank you
An expense is ordinary if it is common and accepted in your trade or business.
Example: If you run a web design business, the cost of software subscriptions (like Turbo Tax) is ordinary because most business use tax software.
An expense is necessary if it is helpful and appropriate for your trade or business.
It does not have to be indispensable or absolutely required; it just has to be beneficial to your business.
Example: A marketing campaign is necessary because it is helpful in generating customers, even though you could technically run your business without one.
To invest in the business or contribute to a retirement account? Short answer; contributing to a retirement account could possibly provide a deduction while investing in the business as a capital contribution is not tax deductible but the use of the funds could possibly create a business deduction.
Here is an in depth articles that you might find very informative and helpful with your questions about is it deductible for a business.
https://turbotax.intuit.com/tax-tips/small-business-taxes/taking-business-tax-deductions/L5RueYPVS?priorityCode=3468337910&_gl=1*23rexu*_gcl_au*MTYxOTIxOTkwNC4xNzYyOTc2MjAy*_ga*MTU4NjQ3NDE0My4xNzYyOTc2MjAx*_ga_J7JHVCT5CT*czE3NjI5NzYyMDEkbzEkZzAkdDE3NjI5NzYyMDEkajYwJGwwJGgw
Here is a number of calculators that could assist you in your calculations
https://turbotax.intuit.com/tax-tools/
An expense is ordinary if it is common and accepted in your trade or business.
Example: If you run a web design business, the cost of software subscriptions (like Turbo Tax) is ordinary because most business use tax software.
An expense is necessary if it is helpful and appropriate for your trade or business.
It does not have to be indispensable or absolutely required; it just has to be beneficial to your business.
Example: A marketing campaign is necessary because it is helpful in generating customers, even though you could technically run your business without one.
To invest in the business or contribute to a retirement account? Short answer; contributing to a retirement account could possibly provide a deduction while investing in the business as a capital contribution is not tax deductible but the use of the funds could possibly create a business deduction.
Here is an in depth articles that you might find very informative and helpful with your questions about is it deductible for a business.
https://turbotax.intuit.com/tax-tips/small-business-taxes/taking-business-tax-deductions/L5RueYPVS?priorityCode=3468337910&_gl=1*23rexu*_gcl_au*MTYxOTIxOTkwNC4xNzYyOTc2MjAy*_ga*MTU4NjQ3NDE0My4xNzYyOTc2MjAx*_ga_J7JHVCT5CT*czE3NjI5NzYyMDEkbzEkZzAkdDE3NjI5NzYyMDEkajYwJGwwJGgw
Here is a number of calculators that could assist you in your calculations
https://turbotax.intuit.com/tax-tools/