February 10, 2020
There is a mindboggling array of tax deductions that small businesses may be entitled to and whittling down the ones that might apply to you and your business, can be tricky.
This list of deductions is designed to help you understand which ones you might be entitled to, but you should always check with a tax professional if you’re unsure:
Keeping records of work-related journeys made by your vehicle, is essential if you’re to get the most out of this deduction. At tax time, you can opt to deduct your actual expenses such as gasoline, maintenance and parking, or simply calculate your mileage.
An office at home:
If you run all, or some of your business from home and have a specific room dedicated for this purpose, then it might be tax deductible.
If you buy new capital equipment for your business, then there is a depreciation tax break that enables you to deduct 100% of your costs upon purchase. You’ll need to check exactly what equipment qualifies under the Tax Cuts and Jobs Act, however.
Should you hire a professional business consultant to help you grow your enterprise, then their fees and overall cost are deductible, provided those fees are considered reasonable enough to qualify, that is.
Wages and salaries:
As the sole owner of a business or of a company that is an LLC, you can deduct from salaries and wages that are paid to part-time and full-time employees even if you can’t deduct draws from the income that you make.
Work opportunity tax credit:
There is a credit called the Work Opportunity Tax Credit that you may be eligible for if you’ve hired military veterans or other long-term unemployed people to work at your business.
Office supplies and expenses:
Whether your business has a traditional office or not, you can still deduct conventional business supplies and office expenses provided they’re used within the year that they were bought, and that you have valid receipts for them, of course. It may also be possible to deduct the cost of postage, shipping and delivery services if mail-order makes up part of your business.
Client and employee entertainment:
Provided actual business is discussed during an entertainment event held within a business setting, and for business purposes, then you may be able to deduct some of the costs incurred, if not all of them.
Freelance/independent contractor labor:
You should be able to deduct the costs of hiring independent contractors to help out at your business, but you must be sure to issue a Form 1099-MISC to anyone who earned $600 or more from you during the tax year.
Furniture and equipment:
When it comes to small business tax deductions for furniture and equipment, you can either deduct the whole cost for the tax year that it was bought in, or depreciate the purchases over a period of seven years.
Note that these are just a fraction of the possible tax deductions for small business owners, and should you wish to know more, reach out to your local tax professional.