Small business owners often wrestle with wanting to consider everything as a business expense, for minimizing taxes, but then their limited income does not qualify them for the lending they think they deserve. We call this the “teeter-totter effect.” If you conduct your business to minimize their taxes, you will write off as many expenses as possible so that your taxable income appears low. Many business owners have this strategy. However, when it comes time to apply for a loan or line of credit, their taxable income is too low to qualify. They may feel this is not accurate, and their business is successful enough to qualify. It may well be, but because they are maximizing deductions, they aren’t profitable enough on paper to qualify.
At Howard Slutsky CPA, we can help you plan ahead so you can prioritize either minimizing taxes or maximizing borrowing power. Our professionals understand what items are deductible, and whether or not you should make them a business expense, depending on your other goals and needs.