Is Your Small Business Taking Enough Deductions?

CNN Money just published a great article exploring the myriad ways that small businesses actually help the government screw them out of more tax money than they really should pay. It’s worth your time to check it out and see if you are due more deductions than you’re actually taking.

The article suggests reviewing things like the way that your deductions are categorized. A great example that they use is that small business owners will sometimes categorize their hotel bill for out-of-town trips at “entertainment” which only gives them a 50% deduction. The correct category, “lodging,” will garner 100%. Which deduction would you rather take?

The article is full of useful suggestions like that. But don’t take it too far! The author makes a great suggestion: the laugh test. If the proposal of a deduction causes you to snicker – like the lawyer who invited his clients to his daughter’s wedding then tried to write the expense off as a business meeting – then you’ve probably gone a deduction too far!

Tax Break Balances Minimum Wage Hike

Maybe that extra value meal doesn't need a price hike, after all

If you are like me, when you first heard about the increase in the federal minimum wage, you had serious concerns. How will this affect the cost of my value meal number 2 at McDonald's? Will I be able to afford to continue clogging my arteries on a regular basis?

In seriousness, most of us agree that trying to make ends meet on $5.15 per hour is close to impossible. But would a wage increase actually help the working poor, or would it just drive the prices of goods and services up to the point where the working poor still couldn't afford them?

It turns out that our lawmakers did have some sympathy for the small business owners who would be most impacted by the increase in expenses brought on by the minimum wage hike. Along with the wage increase, a series of tax breaks for small businesses was passed. These include expanded deductions and write-offs, along with incentives to hire people from some economically disadvantaged groups, such as people on public assistance and people just released from prison.

Sounds like a potentially win-win situation, not only for small businesses and minimum wage workers, but for everyone who doesn't want to see the rising costs of doing business reflected in the amount we pay for our goods and services.