10 Common Small Business Tax Deductions
Starting a small business is one way to supplement your income. Small businesses do not have to operate out of a storefront. They can be started in your home. The government allows small businesses several tax deductions each year that some people may not be aware of.
The government looks kindly on the small business owner. They applaud your entrepreneurial spirit with tax deductions to lower your taxable income. Small business owners pay more taxes than they should because they are not aware of common deductions that are allowed.
1. Start-up Costs
The biggest obstacle is getting over the hurdle of start-up costs. It can take a big slice out of the pie but you can get back a portion at tax time. Small businesses can deduct as much as $5,000 in their first year of business for starting costs. Costs include travel, advertising, and legal fees.
2. Vehicle Use
The government allows you to deduct certain expenses for business vehicles including mileage. Keep good records for this deduction in case you are challenged on any point. If the vehicle is used for business and personal activities, you can deduct only the amount represented by the percentage used for business.
3. Equipment Deductions
All businesses need equipment of some kind. The amount can be deducted all at once, up to but not exceeding $108,000.
4. Entertainment Deductions
Who wouldn’t want to have a fancy dinner on the government? Business meetings over dinner or attending business conferences in sunny Florida can be deducted as business expenses. Meals are deducted at a rate of fifty percent.
5. Travel Costs
Traveling for business is a tax-deductible expense. Keep your receipts for airline tickets, hotel stays, and meals. Any service that was necessary during the course of the business trip is subject to a deduction. Money spent on family members who are along for the ride is not deductible.
6. Advertising Costs
You can deduct for expenses incurred for advertising. This includes print, billboard, radio, and television.
7. Legal Fees
Businesses consult lawyers from time to time about business matters or to review contracts. The fees charged by your lawyer are tax-deductible.
8. Charitable Contributions
Charitable contributions are tax-deductible based on the value of the item. Money given can be deducted for the actual amount, but goods can only be deducted for the amount received when they were sold by the charity, not what you paid for it originally. This includes cars.
9. Software deductions
Small businesses can deduct the cost of software purchased for exclusive use by the business. The deduction applies for the tax year that the software is purchased.
10. Educational Expenses
Knowledge is power and more money in your pocket. Expenses for classes taken to further your knowledge for your present business are tax deductible.
Businesses have a distinct advantage when it comes to tax breaks. Take advantage of all the deductions available to you. Check with a qualified tax professional for further information on these and other tax deductions.
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entertainment deductions have to be the best, who doesn’t want to eat a tax exemptable meal?
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