| As a sole proprietor, it's wise to familiarize yourself | | | | 3. Taxes - You may deduct Social Security and |
| with the some key deductions that may reduce your | | | | Medicaid taxes paid to match required withholdings on |
| tax bill for 2004. | | | | employee wages, federal unemployment taxes, sales |
| Small-business consultants generally recommend that | | | | taxes and real estate or personal property taxes paid |
| you hire an accountant to prepare your tax returns, | | | | on business assets. |
| payroll and financial statements. But you should also | | | | 4. Home Office - Depending on whether you use your |
| meet with your accountant well before the year-end | | | | home or other real estate for business purposes, you |
| rush to discuss such matters as tax planning, and | | | | may deduct some or all of any mortgage interest paid, |
| record keeping for tax deductions. | | | | as well as some or all of the maintenance and repair |
| Seven common small business tax deductions: | | | | expenses associated with the property. The cost of |
| 1. Employee Benefit Plans - You may deduct | | | | utilities and business supplies associated with business |
| contributions to employee benefit plans (such as health | | | | use are also deductible. |
| insurance plans and retirement plans). Depending on | | | | 5. Depreciation - Depreciation may be taken on |
| your circumstances the maximum contribution that you | | | | passenger cars, equipment used for entertainment or |
| may deduct per employee in a qualified retirement plan | | | | recreational purposes (i.e., photographic equipment, cell |
| can go up to: | | | | phones and computers), as long as these items are |
| $100,000 or more For a Defined Benefit Plan | | | | used solely for the business. |
| $44,000 For a 401(k) plan | | | | 6. Professional Fees - You may deduct professional |
| $41,000 For a SEP-IRA or Keogh | | | | fees, such as those paid to a lawyer or accountant. |
| 2. Automobile Expenses- You can elect to deduct the | | | | 7. Meals and Entertainment - You may deduct 50 |
| actual expenses incurred (including gas, oil, tires, repairs, | | | | percent of meal and entertainment expenses directly |
| insurance, depreciation, and rent or lease payments) | | | | associated with the conduct of your business |
| for the business-related portion of your car or truck | | | | Remember to keep on file the records and |
| expenses, or simply take the 2004 standard mileage | | | | documentation necessary to substantiate all of your |
| rate of 37.5 cents per business mile. | | | | deductions. |