The decision to form an LLC is one of the more sensible options most people can make with their businesses. To those who follow this path, there are a number of serious benefits that can be explored. Naturally, you might also have a number of questions or concerns about how to handle tax season with your LLC. While seeking help from a tax professional during your first year with your LLC can sort a lot of this out, you can find answers to some of the more commonplace questions on your own.
For many business owners, there is the question of whether or not it is possible to write off the lease for the company vehicle. While this is definitely a possibility, you want to consider a few general points in order to get the most out of the experience. Use this guide to get a better idea of what to expect.
Have All Paperwork Handy
Perhaps the most important aspect of writing off your lease is having all the necessary paperwork handy when you sit down to do your taxes. The contract and associated documents will provide you with all the data you need. Don’t assume you know where you put the paperwork, either. Take time to place everything you need in a single location and organize the information as well as you can. Once tax season rolls around, you’ll be thankful that you took this preliminary step.
Another tip to keep in mind throughout the year is documenting your mileage. If this is your first time writing off this specific lease, then you will need to figure out what the vehicle’s mileage was at when you officially started using it for commercial purposes. Additionally, the IRS can be quite meticulous when it comes to the way a business writes off specific expenses. With vehicles, the car needs to be used solely for the company. Any miles added for purposes outside of standard business, like a personal vacation, should be deducted from the total mileage.
Do the Math
Once tax season arrives, you will need to do a bit of math in order to figure out what you can write off. While a bit of math is always involved with operating a vehicle, determining the mileage is a bit different than weighing out auto insurance quotes from a variety of providers. The equation offered by most professionals is straightforward: you take the total amount you have spent on the vehicle and multiply it by the total vehicle business usage. This will provide you with the number you can put on your taxes and write off for your LLC.
Check All Your Forms
Though writing off a vehicle for an LLC is very similar to the way you would approach writing off a vehicle for your own personal use, there are a handful of points to remain mindful of along the way. Specifically, you absolutely need to be positive you’re using the correct forms. This should go without saying, but you might be surprised at how many business owners learn at the last second that they are using the incorrect forms. All of the information you need about forms and documents should be available easily on the official IRS website.
Work With the Pros
Naturally, taxes can be quite involved. Even though writing off the lease for your company car is not too complicated an endeavor, it is only one small component of a larger equation. If you find yourself overwhelmed with all of the ins and outs of handling your LLC’s taxes, it is in your best interest to reach out to an expert who specializes in tax prep. Though this can seem like an expense, it is one of the best ways to maximize your experience and feel satisfied with the results.
There are a number of points to keep in mind when the time comes to handle the taxes for your LLC. Be sure to think through all of your questions in advance and give yourself plenty of time to find the best solutions for your company.