Unfortunately, the tax landscape isn't always so clear for users of on-demand staff and space, especially those who may meet customers at multiple locations. To avoid potential penalties and limit your tax obligations, consider the following tax strategies when your business is utilizing virtual offices.
- Hoard receipts: Frequently on the move, virtual office users often struggle to maintain receipts and other important documents. Receipts are a key portion of the income and taxation puzzle, so it's critical that you create a systematic approach to gathering, storing and organizing transactional records. Without proper proof of deductible expenditures, you will miss opportunities to claim expenses.
- Set aside workspace: Many choose to forgo home-office deductions, because they believe it will trigger an audit. This is generally a myth, as long as you properly file Form 8829, Expenses for Business Use of Your Home.
- Use on-demand staff: Avoid troublesome payroll taxes by using on-demand reception staff from locally-based administrative assistants like those employed by Intelligent Office. Not only will avoid tax repercussions, but you’ll also only be paying for the time you need!
- Make sure you have all the right paperwork: If you are operating a small business from a home office, you are likely to need business and occupational licenses, proper tax registrations and specific permits from local, state and federal governments to legally operate. This can be a compelling reason to use your home address for your LLC, and establish your “Doing Business As” (DBA) professional address with a brick-and-mortar virtual office provider.
- Pay your taxes quarterly: The IRS requires independent contractors and other self-employed workers to pay estimated federal taxes on income and FICA every quarter. If you wait to pay the whole lump sum at the end of the year, you are likely to incur unnecessary penalties.
- Hire an expert: As your small business grows, the tax landscape can become even more complex and convoluted. When this occurs, it pays to hire a knowledgeable bookkeeper or accountant. Just make sure to carefully vet a potential candidate before you make a hire to ensure that he or she is familiar with your industry.
To the chagrin of many, antiquated tax codes have not yet caught up to the reality of on-demand office users. Many tax preparers can be found using virtual office locations nationwide. Reach out to Intelligent Office to find an informed tax professional who’s already using on-demand staff and space; they will understand your tax needs.