What to Know About Small Business Tax Deductions
As a business owner, you’re well aware of the fact that running a company comes with a whole range of expenses. You have payroll expenses, marketing expenses, rent expenses, upkeep and maintenance expenses, and so forth. In addition, you have your tax obligations to grapple with. In order to preserve as much of your hard-earned income as possible, you will want to research and claim as many tax deductions as you possibly can.
Claiming business deductions is not always straightforward. If you have a home office, for instance, and wish to claim the home office deduction, there are certain rules you must follow in order for the claim to be successful. What’s more, to claim a deduction, you need to first be aware of that deduction altogether, and that is something which often requires extensive research.
This is why partnering with an experienced tax advisor is so critical. A tax professional can help you identify the various deductions you may be able to claim and guide you through the rules you need to follow.
A List of Small Business Deductions
This check-list is far from exhaustive, but here are a few examples of tax deductions which are frequently claimed by small businesses:
Deductible Business Expenses
- Advertising
- Facebook ads
- Google ads
- Promotional signage
- Website updates
- Business meals
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- Treating clients to a meal where you talk about business
- Treating your office and your employees to a meal
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- Business use of your car
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- 54.5 cents per mile
- Cost of goods sold or service
- Depreciation
- Depreciation cost of larger assets in your business
- Home office
- Wifi
- Home office furniture
- Home office rent
- Insurance
- Interest and bank fees
- Interest on business bank loans
- Interest on business credit cards
- Business bank fees
- Legal and professional fees
- Bookkeepers
- Accountants
- Lawyers
- Real estate taxes
- Salaries and benefits
- Contract labor
- Telephone and internet costs
- Travel
- Work trips
- Lodging expenses
- Utilities
Tax Credits or Deductions
- Alimony paid (but not child support)
- Charitable contributions
- Child and dependent care
- Education
- Professional development
- Online classes
- Energy efficiency property expenses
- Foreign earned income exclusion
- HSA contributions
- Interest on investments
- Medical care
- Mortgage interest paid
- Retirement contributions
- State and local taxes paid
- Self-employed health insurance premiums
- Section 199A deduction for qualified service businesses
- Student loan interest paid
Again, there are other deductions available to small businesses, but these are among the most commonly claimed.
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Deductions can literally transform the course of your business. They can help you grow and expand and even allow you to stay afloat during difficult times. During this pandemic, learning about small business deductions has never been more important. For more information, reach out to the team at Boxelder Consulting today.