From the minute they open their doors, business owners are urged to keep a close eye on cash flow. And for good reason — even companies with booming sales can get into serious trouble if they lack the liquidity to compensate employees and pay their bills. Here are four ways businesses can better control cash flow.
What Expenses Can’t Be Written Off by Your Business?
If you check the Internal Revenue Code, you may be surprised to find that most business deductions aren’t specifically listed there. For example, the tax law doesn’t explicitly state that you can deduct office supplies and certain other expenses. Some expenses are detailed in the tax code, but the general rule is contained in the first sentence of Section 162 (PDF), which states you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.”
3 Ways Your Business Can Uncover Cost Cuts
Every business wants to cut costs, but it isn’t easy. We’re talking about clear and substantial ways to lower expenses, thereby strengthening cash flow and giving you a better shot at strong profitability.
Obvious places to slash costs (such as wages, benefits and overhead) often aren’t viable options because the very stability of your operation may depend on them. But there might be other ways to lower expenses if you dig deeply enough. Here are three possibilities.
7 Smart Ways to Separate Business and Personal Expenses
Do You Avoid Separating Business and Personal Expenses?
You’re in good – or should we say, bad – company. Over half of American business owners use either their personal checking account or credit card for business purposes, according to a Forbes Expert Panel.
Section 179 Expensing and Bonus Depreciation Pitfalls
If eligible, you can elect to use Section 179 expensing or bonus depreciation to deduct a large portion of the cost (and, in some cases, the full cost) of eligible property in the year it’s placed in service. Alternatively, you may follow regular depreciation rules and spread deductions over several years or decades, depending on how the asset is classified under the tax code.
Business Savings: Acquiring & Placing Assets in Service by Year-End
Under Section 179 of the Internal Revenue Code, companies can “expense” the full cost of qualifying fixed assets to reduce their taxable income. This means they can deduct the purchase amount currently rather than having to depreciate the asset over many years. Both new and used fixed assets can qualify. The election is available for qualified property placed in service anytime during the tax year.
New Per Diem Rates for Business Travel
The IRS has announced the per diem rates for ordinary and necessary business travel expenses in the fiscal year 2023-24:
Deducting Business-Related Vehicle Expenses
If you’re self-employed and use your car, SUV, or other vehicle for business, you can deduct certain business-related vehicle expenses. Depending on the cost of operating the vehicle or how much you drive it, as well as how much of your use of the vehicle is for business purposes, this can add up to a significant tax deduction
Tax Breaks for Teachers and Educators
It’s almost time for the start of the new school year, and if you are a teacher or other educator, you should know that you can still deduct certain unreimbursed expenses. Deducting expenses such as classroom supplies, training, and travel will reduce your 2023 income tax liability. And you don’t even have to itemize to claim this deduction.
Deducting Medical and Dental Expenses
If you, your spouse, or your dependents had significant medical or dental costs in 2022, you may be able to deduct those expenses when you file your tax return this year. Here’s what you should know about medical and dental expenses and other benefits: