All Woocommerce shop owners have one thing in common: the responsibility for declaration and taxation. Annual inconvenience? Yes -but this is also a good opportunity to review the best practice and find new money -saving methods.
Appropriate tax preparation and best practice will have a significant impact on your bottom line. In fact, Forbes reported that more than 90% of American business owners paid more taxes! Why? Because taxation is complicated. For example, the US tax law is more than 70,000 pages. Yes, 70,000 pages.
Although we cannot summarize the information of 70,000 pages, we can see the most useful and common methods to legally reduce your taxpays.
How the cost and expenses affect taxable income
The tax you owed is based on your profit (total income minus total expenses) Essence This means that the more you spend in your business, the more taxes you can save! In most countries/regions, all legal commercial expenses can be exempt from tax -salary, equipment, travel and advertising.
Therefore, if you tax at 40% tax rate, then you spend every expense One dollar may only spend 60 cents! But this does not mean that all expenditures are good expenditures. Not all business expenditures are measured equally, so let’s see the differences between cost and expenditure.
cost, cost and depreciation
You pay taxes for your profit -minus the remaining amount of sales cost, depreciation costs, operating costs and interest costs.
Because operating expenses and sales goods costs are generated when income, they can be deducted in your business tax declaration form, thereby reducing your income tax bill.
The cost of equipment does not directly affect taxes, but the cost of these assets is used to determine the annual depreciation costs.
can be deducted. It is considered to be \”non -cash expenditure\” because no one has written checks for depreciation, but companies can use it to reduce income for tax purposes. If you buy a computer, you can deduct value depreciation every year, usually about 10-20% per year.
The deduction cost and non -deductible fee
Deducting expenses will reduce your taxable income -you can deduct a certain percentage or all costs, depending on the cost -instead of deducting costs without affecting your tax bill.
Deductable costs:
This includes business -related costs, charity donations, investment losses and employee wages.
Unrepaired expenses:
This mainly refers to personal expenses, such as rent, gasoline and entertainment. However, in some cases, your cost background may verify tax reduction and exemption. These are called deductible in the context.
For example, if you travel for a business conference or event, your gasoline may be regarded as business costs.
We recommend that you learn the tax law in a place where you may be familiar with the available tax reduction. What’s better is: Consultation accountant or tax professionals to discover every opportunity provided by your country/state.
How to save money for you
To determine the useful deduction that is available in context, I would like to ask myself a few questions:
Is your health insurance cost exceeded 10%of your total income?
Do you have a family office?
Does your company need a business trip?
Do you need to provide diet for your customers?
Do you need to pay the entertainment cost for customers?
These considerations are most suitable for the United States, but other countries usually have similar tax laws and regulations.
If you answer any of these questions \”yes\”, you can deduct some related costs from your taxable income and save funds!
Health Insurance
After you conduct the necessary deductions, health insurance is eligible to obtain IRS medical expenses deduction, up to 10%of your total income.
office at home
To obtain the qualification to deduct the rent deduction of the family office, you must: regularly use your business to use your home your home your home your home The room or part.
This part of your family is used as the only place for the company and/or the place where/or the customer/customer regularly meets.
How to calculate your family office tax reduction and exemption:
The square foot of your office space [up to 300] x 5 \u003d tax -free amount.
If your office space is 300 square feet, you can deduct each year deduction 1,500 US dollars
Travel
If a business meeting or operation requires a business trip, some of these costs can be exempt from tax. In some cases, your company may need its own vehicle; in this case, you need to decide whether to deduct the mileage or the actual cost of the vehicle.
In the United States, the U.S. Taxation Agency announced that the standard mileage rate in 2020 was 57.7 cents per Mile of Miles. For other vehicle -related expenses, a percentage will be deducted according to the operating mileage in the following regions:
Registration fee and taxes
And parking fee
If you decide to adopt the actual cost method, you can deduct:
Depreciation
Garage rent
Petroleum
Tire
Registration fee and taxes
Maintenance and repair
License
Vehicle loan interest
] Rental or rental payment
Pass and parking fee
Insurance
Diet
As high as 50% of business meals, as long as:
You or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees are traveling or other employees. Employees are present with customers, employees, potential new customers or consultants, and
This meal is not rich, and
The cost is not a personal dining fee.
Entertainment In the past, the U.S. State Taxation allows the company to deduct 50% of the entertainment costs for customers, employees, potential new customers or consultants, but no longer allow. If you bring a third -party member to participate in the event to negotiate the business and dine, you can deduct 50%of the meal fee, but you cannot deduct the ticket/admission fee. No matter what deduction you adopt, it is important to review these deductions with your accountant or registered accountant every year -the lawLaw regulations (and indeed!) Will change.
Business equipment
For equipment that meets the tax reduction conditions, it must be necessary to operate your business and not be used for any personal activities. Your printer can be used as a commercial device, but it must be used in your office and only for work. In the United States, only one device cost, your company is eligible to obtain a tax reduction of up to $ 500,000.
What if the device is broken? If maintenance is an improvement, repair or transformation of the device, you can deduct the maintenance cost from the tax.
Do not mix business and personal expenses into a talk
Mixing your business and personal expenditure is a necessary way to trouble. Avoid this by setting up an account that is purely used for business. After completing this operation, link this account to your cloud accounting software to easily record and track the cost.
additional reminder: Synchronize woocommerce and cloud accounting software The most important thing to remember in terms of tax saving, Yes: Track everything. Everything means everything -every pack of pen, every cup of coffee, and every travel fee. Save these records on accounting platforms such as QuickBooks means that you can use these data to combine with your sales/income to provide meaningful reports and indicators to better develop business. Make sure you accurately track the sales situation, so that you will not report more or less income.
MyWorks Sync introduced all your sales, customers, products, sales tax and payment information from Woocommerce Quickbooks and classify it into the corresponding account. Combining this with the easily uploading the receipt to the QuickBooks, your book will be effortless!
Taking your expenditure and understanding how to deal with your taxes is a responsible and wise way to save your corporate funds. As usual, it is best to listen to the suggestion of registered accountants or accountants when making these decisions.
Deductable costs: 
