Anyone who owns a small business should know the different tax deductions they can claim. Taking advantage of all the available deductions can help reduce your taxable income and save you money. If you’re not sure which tax deductions to take, here are ten that you should look into.
1. Travel Expenses
Business owners may use their personal cars for business purposes, in which case they can deduct business miles on their tax returns. If business owners don’t use their cars, they can take a business deduction for using a rental car or a borrowed vehicle.
2. Cell Phone
Cell phones are an absolute business essential. Business owners can deduct business cell phone bills as long as there is a business purpose for them having a business cell phone. A business cell phone can be an absolute necessity if your business requires that you travel or you have clients you need to contact regularly.
3. Health Insurance Premiums
Those business owners who pay for their health insurance premiums and whose business doesn’t provide them with a means of paying for it can deduct health insurance premiums on their business tax returns. The health insurance deduction is pretty significant as it also consists of your entire family’s insurance expenses.
4. Office Furniture
Office furniture is another business expense that business owners can deduct. These business expenses don’t have to be luxurious; even a business table or desk will do. However, business owners must keep their business receipts to prove that they used the business furniture for business purposes only.
5. Business Meetings
The business industry is constantly evolving, so business owners need to keep up with what’s new. You can do this by attending business conferences and business meetings, but business owners can deduct expenses incurred during business trips to attend meetings and seminars.
6. Employee Benefits Programs
Businesses with fewer than 50 employees can deduct business dependent care and adoption assistance programs expenses. Businesses with fewer than 25 employees can also deduct childcare business benefits.
7. Home Office
Business owners who work from home can deduct business expenses such as:
- Business utilities
- Home repairs and maintenance
- Internet bills
- Homeowner’s insurance
- Property taxes
To qualify for home office tax deductions, you will need to have an actual office in your home.
Business tax filing is crucial as you can deduct business taxes owed on business income. The taxes may be federal, state, real estate, business property, business sales, and many other business taxes. Business owners must keep receipts to claim the business tax deductions correctly.
9. Training and Education
Business owners need to train employees to instill new skills or help them increase their productivity. The expenses incurred during training, such as fees for the trainers, meals for trainers and trainees, and equipment used, are tax-deductible.
10. Business Entertainment Expenses
Business owners can still potentially deduct business entertainment expenses related to business. It includes costs incurred entertaining employees and clients with events and business meals. Business owners must keep business receipts to ensure that they deduct business entertainment expenses correctly.
This is more of a grey area right now after recent legislation and policy change, so check with your accountant first before planning to deduct too many entertaining activities or meals.
Having business tax deductions available for business owners helps them save money and run their business smoothly while avoiding debt. Business owners should hire business bookkeepers or business accountants including CPA professionals to assist them with bookkeeping services to help take advantage of such deductions in line with IRS guidelines.