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It’s easy for electricians to be so busy quoting jobs and serving customers that they forget to think about taxes. Unfortunately, this oversight can come back and bite you at tax time.
10 Tips to Save Money At Tax TIme
You need to keep taxes at the top of your mind all year long if you want to save as much as you can. Electricians and electrical contractors in Tennessee should use these 10 tax-saving tips to decrease the tax amount you owe (and keep more money in your pockets).
1. Set Up AN Easy Way To Track Deductions
If your tax tracking method is too cumbersome, you’ll forget to do it. Make it easy by keeping a big manilla folder in your vehicle or at your desk to stuff receipts into.
If you’d rather go high-tech, download a mobile app on your smart device to track expenses. A few budget-friendly, easy-to-use options include:
2. Log Deductions As soon as Possible
If you plan to add your expenses and purchases to your tax tracker once a month, you’ll undoubtedly overlook some entries that could help with your tax bill. Try to record them as soon as they happen to ensure you get every possible tax deduction.
Related: Everything You Need to Know About Sales Tax Rules for the Construction Industry
3. Deduct Everything You Legally Can
Some electrician deductions are obvious, like protective equipment costs, vehicle expenses, and professional membership fees. However, there are other, less obvious deductions. For example, your company’s website cost, office improvements, tolls, attorney fees, and even banking fees are deductions that can save you money at tax time.
4. Deduct Vehicle Expenses
Company vehicles are typically one of the biggest tax deductions electricians can take. The cost of the vehicle, the money spent on maintenance, or every mile you drive while performing business functions is deductible. Getting the most out of vehicle deductions requires keeping detailed notes of the miles driven and money spent on the vehicle.
5. Deduct Education and training
Electricians may attend a class or workshop designed to maintain your license or expand their knowledge. Fortunately, the price of these classes can be deducted from your taxes.
6. Know Your STate's Laws
Some states implement laws regarding the taxes electricians must pay that other states don’t require. Read up on your state’s laws and follow them to the letter.
Related: 3 Financial Statements Every Electrical Contractor Should Know
7. Pay Your Taxes On Time
Not planning for your tax bill can put you in a bind when the deadline arrives. If you can’t pay it in full, you may have to cough up even more money in fines and penalties. Stash money back all year long to be ready to cover your taxes when the time comes.
8. Avoid Stretching The Truth (Or fabricating Deductions)
As tempting as it may be to tack on a few hundred extra miles on your log and throw in a purchase that isn’t technically deductible, don’t do it. These are the practices that get you into serious trouble if you’re ever audited. Trust us, the few dollars you save won’t be worth it.
9. Time Your equipment purchases strategically
Plan new purchases to maximize tax savings. If there are certain benefits for replacing them (sometimes energy-saving replacements get tax credits, for example) or you’ve had a profitable year and need more deductions, new purchases may make good sense.
10. Work With AN Experienced Tennessee CPA Firm
The final point is one of the best tips to follow for tax savings. Just like you wouldn’t recommend that a CPA wire their own office, we don’t advise an electrician to handle their accounting!
CPAs stay updated on new tax requirements, the deductions allowed, and specific policies in your state. Find a reputable CPA firm and leave the tax (and other accounting responsibilities) to them so you can focus on growing your business.
Chaliff + Associates Is Your Choice For An Experienced Electrician Tax Accountant and Bookkeeper in Tennessee
We help electricians and other contractor professionals manage their books and taxes every day. Trust us with your accounting needs to save you the headache. We’ll help you keep as much of your hard-earned cash as possible in your pocket. Schedule a call with us today to learn how we can help electricians manage their unique accounting needs.
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