Best Tax Deductions for Small Business Owners
Are you interested in small business tax deductions? As an entrepreneur, there are many things in your business you have to keep track of if you really want to succeed and make money. Unnecessary spending, tax and many others are part of the things you need to be tracking in your business.
As a business owner, there are so many benefits attached to it and claiming tax deductions not available to individuals is one of them. Claiming tax deductions in your business can really save you money.
There are tax rules and laws that you may have never been aware of, and although it may seem foreign or new to you, with some research and the help of an accountant you can learn about the deductions you qualify for and how to make those deductions work for you.
Let us look at some of the most tax deductions available for small businesses.
Top Can’t Miss Tax Deductions for Small Businesses
1. Auto Expenses
If you are using any vehicle for your business or you have a company vehicle, you can save up some few cash for keeping it on the road. If the car is both use for business and pleasure, only the work related usage is entitled for tax deduction.
This means you have to keep track of how you use the vehicle for business hours. You can deduct certain amount of gas mileage for each mile driven, parking fees and any other expenses.
2. Home Office
If you are using a room in your home to do your business, then a portion of the rent or mortgage, electricity bill, insurance will be deducted. But, if the same room is used for other purpose in addition to being used as an office, you can’t claim the deduction.
To know how much to be deducted as tax deduction, is to measure your work area and divide it by the square footage of your home.
3. Travel Expenses
As a business owner, travelling to transact business is something you can’t miss if you are really serious with your business. All business travels are nearly 100 percent deductible. Be sure to document everything which include hotels, airfare, cab fare, dry cleaning while on the business trip, eating in the restaurant etc.
But, if you take your family along, you can only deduct your own expenses. The more accurate you are in keeping track of your expenses, the easier it will be to prepare your taxes and to account for the proper deductions.
This is another tax deductible fee in small business. This include business seminars, workshops and any conference that has to do with your business field that you attend. Don’t forget to include books, DVD, CDs and magazines that are related to your industry.
Of course, there are strict guidelines to be followed – the expense must be to maintain or improve skills required in your present career and must be undertaken during the course of your job.
5. Legal and Professional Fees
Another important tax deduction for the benefit of small business are legal and professional fees. Little or big fees that you pay to lawyers, auditors or tax consultants are fully deductible.
6. Business Entertainment
Do you take client or prospective client to fast food to eat and discuss business? If yes, then you can enjoy 50% deduction from your tax. Have it in mind that eating out with your friends even if you guys are discussing business will not be deducted.
If you host a business meeting in a coffee store and refreshment took place, it also qualifies for deduction. But, don’t forget to write down the purpose of the meet on the receipt or bill.
7. Office Supplies and Equipment
All of the office supplies and equipment purchased for business purpose are also tax deductible. Who knew paperclips could be so valuable? Each time you go out for more printer paper, sticky notes, pens, etc., you should save your receipts because these expenditures offset the taxable income of your business.
Equipment deductions can be claimed at 100 percent all in one year or may be depreciated over a period of five years.
8. Charitable Contribution
When your business makes a charitable contribution irrespective of the amount, claim the deduction. Charitable contributions are allowed as tax deductions for a small business.
Please, whenever you make contribution for charitable uses, make sure you collect a letter from the charitable home for the money donated or something to verify that your business makes such a contribution.
In conclusion, by becoming aware of all the small business tax deductions you can claim, you are maximizing your chances to have a healthy income tax return, which you can in turn reinvest back into your company. Hire a good accountant and learn as much as you can.