One of your most important priorities as an entrepreneur is making sure to take every deduction to which you are entitled. While many are quite apparent, there may be one deduction you have never considered. It has to do with your credit and debit card processing merchant account.
It Pays to Think About Swipe Fees
Throughout the year, your merchant account provider has been charging you a small amount each time one of your customers swipes their card, uses your EMV chip reader or makes an online purchase using plastic. The good news for you is that Uncle Sam allows you to deduct the cost of every one of these swipes. Doesn’t that help to take some of the sting out of those pesky merchant account fees?
The Benefits of Having a Business Credit Card
You probably already know the wisdom of keeping your personal and business accounts totally separate. By doing so, you drastically lower the chances of misappropriating funds. What’s more, records are much easier to keep, which definitely comes in handy when preparing your business taxes.
Another less well-known benefit of the business credit card is that you can deduct all interest you have accrued on your card for your business-related purchases. Other costs such as late fees and annual fees can also be taken as deductions.
Tips for Reporting Credit Card Transactions Fees
If you want to take advantage of these deductions, you will need to start reporting all of your credit card transactions to the IRS. Be sure that your books are in order and that there are no discrepancies between what is in your records and what you communicate to Uncle Sam. IRS Reg-139255-08 specifies all of the criteria you must meet, including who must do the reporting and the way the gross amounts are to be calculated.
Be sure you keep track of variables such as chargebacks, refunds and cash-back payments. In addition to recording net deposits from your merchant account, also keep track of receipts and related fees.
Reach Out For Help
Like most of us, you probably have a healthy respect for the IRS. One of the last things you want is a time-consuming and stressful audit. By being as organized as possible in your bookkeeping, you can minimize the likelihood of this happening. In addition, there is no shame in hiring a financial consultant to assist you in getting all of the deductions to which you are entitled.
Keeping financial matters in order is just as important as hiring competent staff and providing gold-standard customer service and products. Maximize your chances of a smooth and uncomplicated tax season by keeping clear records, and doing your homework about what you must report as well as the deductions you can take. Hire outside help if necessary. Before you know it, you will be able to go back to doing what you do best: growing your business.