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Tax Tips for Small Businesses

By: Will Pierce, Key Accounts Specialist

As an independent insurance agent and business owner you have a lot of tax information you need to be aware of. Here at Senior Marketing Specialists we’d like to offer some quick tips and tricks to keep these processes as smooth as possible for you!

Tips & Info

Deductions

What counts as a deduction? IRS Publication 535, your expenses must be “ordinary and necessary” in order to be deduction.

  • Ordinary expense are common or accepted in the industry.
  • Necessary expenses are helpful and appropriate for your business.

 

Now you’re wondering, what are examples of what I can use:

  • Mileage Driven
    • business related trips only, does not apply to trips to your permanent place of work
    • schedule C and form 2106 will guide you on the standard mileage rate, in 2021 that is $.56 per mile
    • MileIQ, Everlance, and TripLog are some apps you can look at for this
  • Business Cards
  • Office Supplies
  • Software
    • your CRM
    • scheduling software (Everybody needs one! If you’ve been considering it, call Senior Marketing Specialists to talk through it!)
    • website maintenance costs

IRS Changes in Revenue Recognition – Revenue from Contracts with Customers (Topic 606)

  • Timing of Revenue

    • this will most likely shift revenue among quarters due to changes in timing of recognition. Under ASC 606 revenue will largely be recognized at policy effective date.
  • Variable Consideration

    • Under ASC 606 entities are required to estimate variable or contingent consideration, resulting in your revenue being recognized earlier than under current guidelines.

I would advise to speak to your accountant about topic 606 and your book of business’ value (average age of your clients and years they’ve been on the books)

If you have more questions on any of the topics mentioned above, we would highly advise you to contact a local certified attorney if you do not already have one you work with, to go over these changes and how they may impact you.

Sources:

cited in article

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