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It’s the three letters that can send shivers down the spine of any small business owner—IRS. Don’t mess with them, and the hope is that they won’t mess with you.

It’s a good rule of thumb, but unfortunately, because of this motto, many owners miss out on plenty of legal deductions they can claim for their small business. Oftentimes, even the most savvy entrepreneurs overlook all their options.

Before you do your taxes, check out this list of deductions you can claim to minimize the federal toll on your small business and maximize the net profit of your company. Some of the options may surprise you.

1. Home office: The key to avoiding an audit from the IRS when it comes to claiming a home office deduction is knowing what exactly they define as a home office. According to tax specialists, this must be a space that is solely devoted to office work, not doubling as a family-computer room or guest bedroom. The home office deduction can also be applied to a part of a room. Just measure the square footage of your work area and divide it by the square footage of your home. That percentage is what is deductible for business expenses. Just make sure the home office falls under the specific guidelines defined by the IRS.

2. Office supplies: Keep all the receipts you receive for office supplies—paper, printer ink, staplers, pens, post-it notes, you name it. The stack of receipts at the end of the year may be a hassle, but can pay off by offsetting your taxable business income.

3. Furniture: There are a couple different options when it comes to deductions for office furniture—100% deduction on the year of purchase or a depreciative deduction over 7 years—but either way, be sure to take advantage of this one. Furniture really adds up, and using it for deductions can really bring down taxable income.

4. Other equipment: This covers all remaining office equipment not specified in the supplies or furniture deductions—laptops, copiers, fax machines, etc.—and work the same way as furniture deductions with depreciative or 100% deductions.

5. Software and subscriptions: Whether it’s a computer program needed for the operation of your business, or a subscription to a magazine of your industry, you can claim these deductions on your taxes. As of recently, business owners can take the total cost of the software or subscription as a full deduction within the year they were purchased, rather than depreciate the cost.

6. Mileage: If you drive for your work, the IRS gives you money back for business-related driving expenses. The catch? They need documentation. So keep a notebook in your car to record all dates, mileage, tolls, parking costs, repairs, and reasons for the trip. But remember, only claim a deduction for business-related travel. Taking your kids to school in the minivan doesn’t count.

7. Travel, meal, entertainment, and gifts: In addition to mileage, you can receive deductions for airfare, hotels, restaurants, car rentals, and other travel expenses from being away from home for business. Plus, except for restaurants, all of these items are 100% deductible. Eating out is only covered by 50%. So eat cheap, and stay in a nice hotel—or just get room service. Gifts directly for clients are also 100% deductible. Again, keep those receipts!

8. Insurance premiums: If you are paying your own health insurance premium, and are not eligible for any other health care coverage (from your spouse for example), then the good news is that this is also 100% deductible. There are limits to this claim, such as the deduction cannot out-value the net profit of your business, so review the IRS guidelines to see if you are entitled to this deduction.

9. Retirement contributions: Business owners who are self-employed and saving for their own retirement shouldn’t forget to claim a deduction for their contribution.

10. Social security: Here comes the bad news—self-employed entrepreneurs are considered both employee and employer, and thus have to pay double for social security. Luckily, half of the contribution can be deducted on your 1040, so it all works out in the end.

11. Telephone charges: When your phone bill comes in, record the business-related calls and total up the cost. Add up the 12 bills at the end of the year and claim the 100% deduction. It’s that easy, and can be a huge saver.

12. Child labor: We aren’t talking sweat shops here. But employing your children can give you a nice tax break. The IRS does not charge Social Security tax for business owners that hire their children while they’re under 18 years old, and you can deduct their salary as a business expense. The catch is that you must be the sole proprietor of the business, or be in a partnership with your spouse as the only other proprietor. This is a nice way to save a little money and teach your child how to save at the same time.

These are just a few of the ways you can keep more of your hard-earned money away from the clutches of the IRS and in your pocket.

Small business owners don’t have to live in constant fear of being audited. Know your options, including states with the best tax climate, and take advantage of all the opportunities you have—not a bad rule to follow for business and life.

Getting sued is a complicated legal process, as most things are when it comes to law, and the really difficult thing is that it’s not pleasant. Businesses often get into legal battles before they fully understand what a legal battle entails, and a prolonged lawsuit can cripple a small business before it even takes off. Getting sued is never a subject you want to be forced to read about, but just like that Micro-economic class in high school, it may come in handy one day.

A straight-faced man with a large envelope throws open the front doors of your business, makes a beeline for your office, and puts the envelope on your desk with a thump. “You’ve been served”—or in layman’s terms, you’re being sued. The process begins.

The envelope, usually delivered by a third-party, is a court summons and petition/complaint. On the summons will be the details of who is suing you and why, in addition to information concerning when, where, and how to respond to the lawsuit.

STEP #1

After you’ve read the documents closely and fully understand the lawsuit against you, immediately call your attorney. If you don’t have one, that’s all the more reason to act quickly and find one. You can ask business associates and friends, or go online, to find an attorney that has expertise in cases like yours.

Finding and consulting an attorney can be a lengthy process – all the while, the date to respond to the summons is coming closer. Be sure you know when you must respond by, and prepare for it promptly with your attorney. Thus, quickly finding or contacting your attorney is key when preparing for a lawsuit.

STEP #2

Also, notify your insurance agent in addition to your attorney. Just because you are covered from other business risks, like employee injury, doesn’t mean the lawsuit will also be covered. Some insurance companies hire attorneys for their clients, so they may even be of some help in that matter.

But again, this process takes time, and in order for the attorney hired by you or your insurance company to properly mount a defense, immediate action must be taken when you receive the summons.

If you are unable to find an attorney and mount a proper defense by the trial time, the plaintiff can make a default judgment claim on you, meaning you lose the lawsuit whether you have a good defense or not. The typical summons gives you 30 days to respond, but your attorney may file for an extension on your behalf to give you time to prepare.

The two most common lawsuits waged against small businesses are product quality disputes and billing issues

If proper documentation is available, the case may be a simple fix. Regardless, it is advised that you never talk with the opposing attorney without first consulting your own, as your statements could be used against you in court.

Also, be sure to talk to your attorney about the estimated costs and fees of the lawsuit so the bill doesn’t come as a surprise. Consider organizing a budget and schedule of work with your attorney so you can better manage financial costs associated with your defense.

And lastly, be patient.

Prepping for a trial can be a lengthy process, 18-24 months in most cases. Make sure the communication line between you and your attorney stays open during the whole pre-trial process. Unfortunately, being sued is inevitable if you stay in business long enough, so don’t get discouraged. By acting quickly and bunkering down the hatches, your small business can be better defended.

Take advantage of the host of resources for small businesses available on our blog.

You’re partners in life, and you think you’d be great as partners in business, as well. It’s entirely possible that you’re right. Unfortunately, it’s also entirely possible that the stress of business ownership will cause its own set of problems.

Don’t take that as discouragement, of course. Successful companies all over the country are joint ventures between spouses. You just need to make sure that your relationship and business goals fit together in the right way.

Starting a Business Together in a New Marriage

Don’t. This may seem a bit harsh, but seriously, don’t. Wait it out a while, until you’re sure you’ve learned how the two of you work together in stressful situations. This is especially true if marriage is your first time living together. You need to know if you can survive the little challenges like arguments over the position of the toilet paper before you can be ready to survive all that starting a business can entail.

Establish Your Roles

Before you even file that first piece of paperwork for incorporating your business, make sure you each know – and are comfortable with – your assigned roles and duties. Put it in writing and make sure you each sign off on it.

Keep it Separate

This is easy if you have a brick and mortar, but if your business runs from your home it might create a bit more of a challenge. Regardless, to safeguard both your marriage and your business, you need to establish a clear separation between when work is going on and when it’s time for home life.

Incorporate Your Business

If you don’t incorporate, then as a married couple your business automatically becomes a partnership in the eyes of the government and the IRS. If you do incorporate, however, your married status could help you.

If you qualify under the Small Business and Work Opportunity Act of 2007, you can have your business considered a sole proprietorship in the eyes of the IRS. You’ll each have to report a portion of your business income separately, but the benefit of that is that by doing so, you each contribute to and receive credit for Medicare and Social Security.

On the other hand, not incorporating and allowing the automatic partnership means that only one of you will be able to contribute to government retirement programs. That fact alone makes incorporating a safer and better option.

When it Works, it Works

If you have the right communication and the right temperaments, starting a business could end up being the best possible choice for your marriage, your future and your financial outlook. Just be ready to jump those hurdles together.

LLC, “S” corporation, “C” corporation . . . you might think you know all there is to know about the different ways to incorporate a business.  What you might not know, however, is that there’s another business type called a PLLC and – depending on your industry – you might be required by law to form this specific type of company.

What does PLLC stand for?

PLLC stands for Professional Limited Liability Corporation. In this context, “professional” indicates required licensing. Attorneys and health care professionals most commonly fall under the PLLC umbrella, but it really applies to anyone who is required to obtain government licensing to practice in their field.

What does it take to form a PLLC?

In most ways, a PLLC functions just like an LLC, and the formation is similar as well, with a few caveats. You’ll need approval from your state’s licensing board, and depending on your state’s specific laws, you’ll need to file certain forms. There’s a lot of variance here between states, but you can expect the incorporation process to take a bit longer if you are going the PLLC route.

You may also face restrictions on who can own shares in your business. In some states, for example, only licensed attorneys can hold stock in law firms. In other states, those who aren’t attorneys may be allowed to own shares, but only with the approval of the appropriate licensing board.

What’s the point?

If the system seems restrictive, realize that there are many benefits to these types of requirements, both for businesses and consumers. PLLC requirements insure the integrity of your field by not allowing those without the proper knowledge and licensing to influence – and possibly harm – your field as a whole.

They also restrict your competition to other qualified professionals, therefore protecting your bottom line. Without these restrictions, the going rate for the services you offer could plummet as the market fills with those who charge lesser rates because they don’t truly understand the magnitude of what it takes to obtain licensing in – and excel at – your profession. Then, of course, you have professions like medicine, where the requirement to form a PLLC keeps health care in the hands of those who are knowledgeable and dedicated to healing.

The process of forming a PLLC may take a bit longer, but it affords you the same protections as an LLC and – perhaps more importantly – keeps you on the right side of your state boards and the IRS.

If you’ve been considering incorporating a business but the economy has you feeling insecure about your financial future, a recent Capital One survey has some encouraging news. It seems that prospects for small business success are improving.

The Wall Street Journal’s Market Watch is reporting that the most recent quarter’s small business profit numbers are holding steady, and even on the rise in some cases. Even better for the country as a whole, it looks like more jobs may be coming available soon. 37% of small businesses surveyed reported that they plan to hire more employees within the next six months.

The survey also shows a 2-year high in the number of small business that plan to keep spending at the same levels instead of decreasing expenditures. A full 70% will continue the same level of spending, while another 15% expect to be able to increase spending in the upcoming quarter.

This is great news for those who have been putting off starting a business until the economy bounced back. From these numbers, it would appear that the financial prospects for small businesses are not nearly as bleak as they once were. In fact, this could indicate an overall upswing, meaning now is the perfect time to get that startup going!

It seems like many entrepreneurs have already realized that now is the right time to start or grow a business. The survey also found that ¼ of responding businesses have attempted to obtain some sort of financing in the last fiscal quarter, which is a 9 quarter high.

While on the surface this statistic may seem to say that small businesses have more financial need, these are the same companies that reported stability and growth. What the numbers may indicate, then, is the fact that the newfound confidence among small business owners has led to optimism, prompting larger and new endeavors for existing companies.

Incorporating a business . . . now is the time!

We’ve waited years to see numbers in these categories go up, and now it is happening. As small businesses start to again grow and flourish, investor confidence will rise, making starting a small business a viable option for even more people than before.

Of course, if you want to take advantage of this new upward trend, you need to strike while the iron is hot, as they say. Start shoring up your business plan, and research different business entity types to determine which is right for your endeavor.

Then, when you’re ready, start the process of incorporating your small business, and get ready to be an entrepreneur.