Most business owners are not aware of the abundant number of tax deductions out there for small businesses stinging out of tax season.
You as a small business owner are probably looking for ways to maximize your profits. You also might keep more of your hard earned money to yourself.
One effective way that every Chartered Accountant Services suggests that to ensure you are maximizing available tax deductions. It can be very confusing to know where to start with so many tax deductions out there for small businesses.
So you should have a general knowledge of which business costs are deductible and which are not. This is important before you go to file your taxes. Read this detailed guide to gain insights about deductible taxes.
List of Tax Deduction That Small Businesses Need to Know
Ensure that you have these deductions enclosed as you plan for next year’s tax season. You will be well on your way to getting the deductions your business deserves.
1. Startup Costs
Many entrepreneurs do not realize they can claim business expenses on a tax return for expenses that hit before the business launch.
There are conditions of course but most small businesses can deduct up to 5,000 on your first year’s return.
2. Business Use of Your Car
Do you use a car for business purposes? If yes then there are two ways to deduct your vehicle expenses.
One is with mileage and the other is called actual vehicle expenses. This allows you to deduct items like the cost of
- your vehicle
- Insurance
- Registration
- Gas
- Repairs
- Maintenance.
To qualify for this deduction you will need to keep track of your personal mileage versus your business mileage. So that you can take a percentage related to business.
3. Employee Wages and Benefits
An incredible way to grow and scale your business is by hiring employees. You can deduct their wages and benefits.
A lot of business owners are afraid of hiring employees due to increased costs. But the cost difference between hiring an employee and a contractor is only half of the Medicare and Social Security taxes.
The taxes you pay on their salary are a business costs deduction. Additionally you can write off their
- Health insurance premium
- Retirement plan contributions
- Team meetings
- Parties
- Other fringe benefits.
4. Travel Expenses
Various small business owners and their employees spend a lot of time in airports. They need to travel around the country to do business.
All those airline tickets and hotels with meals on the road can get pricey. So the good news is you can deduct most travel expenses for you and your employees.
As long as there is a business purpose behind the trip you are all set to be clear. You will just to make sure to keep all your receipts and detailed records from your travel.
5. Business Meals
There is one disclaimer this is not an excuse to take all your friends to any dinner or lunch on the business card.
But the truth is business does sometimes need dining business clients and that can get pricey sometimes. The good news is you can usually deduct fifty percent of the costs for business lunches.
6. Office Supplies and Equipment
You can deduct the cost of office supplies and equipment including
- Computers
- Printers
- Other office supplies.
You just need to be sure to keep receipts and records of your purchases to probe the expenses.
7. Advertising and Marketing
You will likely have a quite few marketing expenses as a small business owner. You can deduct those expenses which include
- Website design
- Ad costs
- Promotional items.
On social media, there is you will need to do a lot of advertising and marketing these days. So the cost to produce and edit these photos and videos is also a business expense.
8. Professional Fees
Did you think about all those professional fees paid to lawyers and business accounting services as well as other consultants who help you run your business?
Do not cheap out when it comes to your attorneys and tax strategies. They can be worth their weight in gold.
It might happen that your accountant from Chartered Accountant Services is not bringing tax savings ideas to you. It is because they cannot afford to continue their education to keep up with the alternating tax laws.
Remember that the cost needs to be directly associated to your business and not personal expenses.
9. Insurance
You can deduct the cost of insurance premiums for your business that are necessary, including
- Liability insurance
- Property insurance
- E&O insurance
- Health insurance
- Vehicle insurance
- Worker’s compensation
- Other types of insurance.
Being a small business owner you can avail many tax deductions. You can reduce your tax liability and save money by taking advantage of these.
Wrapping Up
Businesses can take many tax deductions when filing their business taxes for the year. This includes deductions for travel to insurance and more.
These deductions can help the business pay significantly less in taxes as it reduces its taxable income.
But be sure to consult a tax professional from business accounting services. Remember that not all businesses can take deductions for every type of business expense.
