Taking the standard mileage rate or business percent of your auto expenses is pretty clear to most entreprenuers. As an entrepreneur, all expenses used to legitimately start, expand or maintain your business are deductible regardless of your income – including your auto expenses.  Taking the standard mileage rate or business percent of your auto expenses is pretty clear to most entrepreneurs.  In our experiences, here are 5 often overlooked auto deductions for small business tax filings.  With the standard mileage rate at $.555 this year, every mile counts.

1) Mileage for errands -   What is often forgotten in small business owners’ mileage calculations  are the administrative tasks that they are often required to accomplish in order to keep the business running.  For instance, many clients know that they can deduct the cost of entertaining a business client.  What they normally don’t account for is the number of miles they drive to do so, and the cost of their parking.  They often ignore the smaller tasks like going to the post office, the printer, the office supply store, the bank, the accountant or the airport.

2) Commuting Mileage – The rule for mileage is that you cannot deduct your commute, that the IRS considers personal.  But the commute is home to your first stop and your last stop to your home.  If you have an office in your home where you do your administrative work, and you stop at the office before taking off to meet with clients, entertain, travel or run business errands, all of that driving is business related and should be accounted for.

3) Interest, Depreciation or Lease Payments – I have rarely run into a business person who doesn’t give me their lease payments when we start accounting for their auto deductions.  However, for those who purchase their car, that asset is available to depreciate from the first date you place it in service.  Each year approximately one fifth of the purchase price (multiplied by the business percentage) is allowed as a deduction against your business income.  But don’t forget the interest on any loans taken out in order to purchase the vehicle.  The business portion of that interest is also deductible if taking the actual expenses for your auto deductions.

4)  Auto Club, Towing, etc – Most business people do remember the oil changes and repairs of their vehicle when preparing for taxes.  However, remember that the towing costs, auto club, batteries, tires, car washes, windshield wipers, etc are also deductible at their business percentage if your are using the actual expenses method of deducting your auto expenses.

5)  Car Registration fees – It is a far better deduction (meaning it yields a larger savings in overall taxes paid) to deduct the fees paid to register your business car with your state through the business auto deduction.  If you don’t itemize your personal expenses, the business tax forms are the only place you can use them.  However, if you do itemize you will find that taking the business portion of those registration fees against your business income lowers the overall AGI (adjusted Gross Income) which is the threshold for whether you itemize or not.  Additionally, if you are subject to the Alternative Minimum Tax you will lose at least a portion, if not all, of the taxes paid to the state which includes your car registration.

AFFILIATE MARKETING – Don’t be fooled, internet marketing is not as easy as many unscrupulous marketers selling digital products may want you to think.  Matter of fact, successfully navigating and generating meaningful revenues from popular online marketing channels will require a great deal of research and trial and error.  However, the beauty of this model is that you don’t need your own product to sell in order to be successful at internet marketing.  You can create your own or become an affiliate and get paid to market someone else’s products.  Once you understand the technical points you just need a website, a host, a product and some targeted SEO.  You could even start an aggregate site for a specific niche for which you could be an affiliate for each, examples of this model are One Kings Lane or Fab.com.

SERVICES – If you have specific knowledge of a specific body of information you can sell your services with very little overhead and start up related expense.  Many professionals offer their services remotely using technologies like Skype and Teleconferencing in order to broaden their market without the complication and expense of travel.  In fact, most business and life coaches are using this approach. You don’t even have to have specific knowledge if you use your imagination.  You can provide delivery services, technical services, personal services , teaching/mentoring services, review services – whatever it is that you know how to do, you can sell.  You could also use a business model centered around a membership site or forum to sell your specific knowledge.

SELLING GOODS ONLINE - Even if you don’t have experience building a website there are plenty of services at places like GoDaddy and HostGator that will be happy to set one up for you complete with a shopping cart.  Or, you can sell on the various sites set up for brand new vendors like E-bay, Amazon, or Etsy.  The kinds of products you sell can vary from a video set or digital book to hand made crafts, to garage style goods.

These are some of the more prominent online business models.  But the great thing about online business models is how creative you can be with your model.  You can start out right away and then tweak the model to assimilate your experiences or progress.  As with all good businesses, the point is to start with a plan of execution and then be flexible and open minded to the options available and changes that may be necessary to create your successful online business.

Set Up an Online Business in Hours

Inc.com (May 3, 2012)

A Not-So-Nutty Business Idea

Entreprenuer.com (April 1, 2012)

Gen Y grads more likely to launch start-ups

USAToday.com (May 7, 2012)

1) START –You actually have to take a leap and get your project started in order to start a business or any task or project. If you spend your first steps analyzing and conferring with the experts you will receive a wide variety of information that will make you think the task is too daunting, too big, too crazy, too expensive, too too too…. Before you get others invested in your success, get it started. Invest in yourself. It doesn’t have to cost a bunch of money or time, but a clearly thought out prototype or plan will really feed your spirit and get you excited and will serve to excite the advisors you later seek.

2) TEST –

Step 2 in starting your small business is to test. Share your project with people in the niche or area your idea will target. Show friends and get their input, show people in your circle and get their input. If you have any professionals that specialize in your product, get test your idea on them. The test stage serves several purposes – it tests your conviction, it tests interest in the idea, it tests your ability to produce the end product, it tests your ability to use this information to form a viable business.

3) FIX –

Go back and make the adjustments from your testing stage. Fix the things you can, find others who can help fix or extend or minimize the areas where the target market seemed flat or uncertain. Fix your outlook on the process and your expectations. Understand that starting a small business is a journey, enjoy it. You’re likely to find the end result much more suitable to your style and comfort level by taking in the criticism of the previous step and implementing some changes.

4) REPEAT –

Retest both your idea and your conviction. Get clarification, and make additional changes as you feel necessary. Get input on the changes as well as the final idea.

5) MARKET AND LAUNCH –

When you feel confident about the idea, it’s time to put it out there for the general target market to see and review. It doesn’t mean you won’t be doing any more testing and fixing, but your idea 1.0 will be ready for its grand opening. Be sure to use all the free and available resources to target your marketing including social media, local newspapers, etc.
Along the line you will have begun to build your team as you follow these steps. Your circle or focus group, your marketing associates, your manufacturers publishers webmasters, accountants, attorneys will all be invested in the start of your small business and not just advising on an intangible idea.  Taking these steps will excite your target and your team into visualizing your concept and starting your small business.

This is not as contrarian as it sounds – how you position yourself and your business depends a great deal on how and what you plan to get out of the business.  Exit planning means defining the kind of business model you will be using, whether it be hands on, passive income generations, building a sellable list (or website) to flip, or creating a legacy for your kids and family.

Knowing your initial plans for where you want the business to end up determines the journey you will take on getting it there.  There are large differences between creating a hands on business that requires your personal touch and attention and creating a sellable list of clients and contacts.

Truth is, a good exit strategy will be flexible and will probably change over time based on finances, politics, business survival, family and location circumstances.  Starting with an exit plan, however, builds the path of how much money you are willing to invest, what kinds of marketing you will be doing, what kind of growth you are currently contemplating and what your time horizon is.  If you are building a website purely for the purpose of building traffic and selling it, your budget will be a lot less than if you are building a legal or accounting practice that you want to leave to your family.  If you are building a business based on a hobby, you may be willing to invest more time and money in it if your ultimate plan is to get paid for doing what you love as long as you can, or you may wish to create a network of self propagating businesses that you simply plant the seed on and receive residual income while you pursue another hobby.

The exit plan will also guide you to when its time to throw in the towel or whether its time to take more aggressive steps to grow.  Knowing what your end game is will keep you aware of how much risk you are ready to take, will keep you focused on your competitors and focused on the type of human resources you employ.

Ultimately, planning your exit is paramount to beginning any successful business venture.

Running a small business means being everything to everyone. Not only do I strategize and plan, do tax returns, set up systems and untold other truly interesting things, I also have to suck it up and make copies, empty the trash, drive, return calls, and a whole slew of things that (although I have a very competent assistant) come to mind in an instant. Being a small business owner means being able to step into all the positions required of your business – if not to do them, to understand the systems involved and to make sure you have the right people in place.

The job is made a whole lot easier when we can employ technologies that are light, portable and dependable. I found that in my new ION handheld scanner. My new toy scans documents into my wand and onto my SD card. The wand is operated on two AA batteries and makes 200 scans per charge.

I am able to scan small records or W2s, excerpts from books or newspaper or magazine articles, and pictures. Then I simply unload my SD card into my digital files and back those up and there you go. I am also thinking about using it to scan recipes or crossword puzzles I come across for personal pleasure. MORE importantly, I can see my clients using this to copy their financial statements for digital storage, for copying their own tax documents, to copy their legal documents, samples and drafts. This little tool will make scanning and emailing even easier when a fax is unavailable.

The wand is so light and compact that it fits in my computer brief, right next to the computer.

Light and easy to use, the ION Copycat scanner is a wonderful new tool for small business people on the move.

How to start a multi-million dollar venture with $10,000

Leap Year: A Big Series About Small Business(online video series)

San Francisco bagel boutique models itself on start-up

Whether it be a sample chapter or introduction to a book, a non-working visual of a website application or an actual non-fuctioning model of your product, having a tangible item for investors or potential users to see, touch and process is a highly effective tool in getting lean startups off the ground. The prototype allows your  vision to materialize for the target who then can use their imagination to see the products worth in their life, their circle or even their community.

The prototype is a means of testing the reaction to your product in your market and in investment circles  without the investment of a full blown product. It also allows for the entrepreneur to take the feedback they get at an early stage to correct problems or meet expectations of the market. \

Don’t be lazy though, the prototype should not just be an illustration or molding of the product. Use the prototype to showcase your talent and skills. Adapt the product to reflect the market research you encounter and to prove to investors how flexible and responsive you are to the market reducing the risks of the investors.

First, consider directly marketing yourself to the big players in your market niche creating the perception of coordination with the top companies. Local Bigwig, a New York based business for executive temporary housing, used this method to grow. They contacted the big players in their industry including Homes.com and Zillow and offered a way of providing them with clean inventory and content that streamed to Local Bigwig’s website when clicked. They were then able to tout their working partnership with the big guys in their field as well as gain credibility on prominent websites with tons of existing traffic.

Another avenue is more of an organic growth through social media. Use games or sweepstakes to get yourself “Liked” on Facebook or to gain more Twitter followers by giving away free services or products. Communicate with bloggers and online news sources about your product or service showing off your expertise and knowledge and letting them know you offer something that will benefit their readers and, by connection, benefit their blog or news site.

Finally, don’t skip steps by trying to promote your business as bigger than you are.  I’m not saying to underestimate your potential, but if you are a new business, embrace the stage of business and opportunities and expectations of a young start up.   Starting a business is a lot like raising a child. From conception to baby steps to planning and organizing the direction of their growth to the sleepless nights worrying about what’s going on when you’re not looking - watch your business grow into self sufficiency, enjoy every step and mis-step and remember each stage comes with its own benefits.  The levels of forgiveness at a start up or small business stage are often far greater than at higher stages of company growth.  You’ll miss opportunities – both with growth and direction – if you fail to embrace the stage of business that you are in.  And you will lose the opportunity to create a flexible roadmap of where you want to go if you skip the growth and discovery phases.

Inspiration, I hope, for getting your idea off the ground:

Personal Branding Like The Stars: How A Systematic Approach Will Revolutionize Your Business

The Investors Who Laughed at Zynga

John Paul DeJoria: Adventures of a serial entrepreneur

Entrepreneur of Small Things