17 Big Tax Deductions (Write Offs) for Businesses

creative tax deductions for small business

Many company owners are not aware of the tax deductions they are entitled to; so, this article offers a general direction on the business tax deductions.

Working hard and expanding the company to satisfy the customers is the ambition and dream of every business owner. To reduce your taxable income when it comes time for tax season, you and your attorney must be sure you are utilizing every deduction and write-off authorized. Smart taxes help you to keep enough money for you to provide back to the economy for growth.

Top 17 major tax deductions your company should know about:

1. startup expenses

If you launched your company in the same year of business, your maximum first-year allowance is $5000, and the balance in 180 equal monthly payments. Among the expenses connected to this area are those related to research, licenses, product development, and website building expenses.

2. Tools and Machinery in Equipment

Under the section 179 expense deduction, sole proprietors, partners, and businesses can also spend up to the whole cost of equipment, machinery, computers, phones, and furniture utilized in the firm in the first year. This describes physical items with a usable life of more than one year.

3. Vehicle Costs

Record the business miles you have driven to claim the percentage of the expenses of fuel, repairs, insurance, lease, and rent, as well as depreciation, should you choose to use your automobile for business. Another handy approach especially if you travel frequently is using the regular IRS mileage rate.

4. Home Stationery Office

If your company is home-based, determine the square footage of the area utilized for the home office as a proportion of the whole house to claim the part of rent/mortgage interest, utilities, insurance, repairs, and depreciation.

5. Travel and Recreation: Entertainment

You can write off any business-related travel; but, this covers just air travel, lodging, meals half of the total, and any local transportation expenses. Only a 50% deduction is permitted for expenses related to entertainment, including hotel meals and tickets to a sports event.

6. Internet and Cell Phone

You can claim this charge if you run a business and use home internet and cell phones. Finding out how often they are hired for work-related needs and how often they are hired for other purposes would help one ascertain their degree of usage.

7. Supply-chain

Purchasing goods with the intention of sale allows you to write off inventory costs from your company expenses. You can also write off the related inventory delivery and storage costs.

8. Reversals and Allowances

Included should be refunds and exchanges you provide to unhappy consumers since they lower taxable income.

9. Marketing and Advertisation

100% allowed are all expenses incurred in running promotional activities including print media, web media, media advertisement – TV/radio, media advertisement – direct mail, business cards, and flyers.

10. Legal and Administrative Services as well as Professional ones

Deductible expenses include the fees of lawyers, accountants, freelancers, graphic designers, IT consultants, and any other profession you engage in to counsel or assist your company.

11. Coverage: Insurance

Deductible expenses include those paid on business insurance including liability insurance, errors and omissions, car, medical, disability, buy-sell, and business overhead insurance premiums.

12. Maintenance and Corrections

Deductible expenses are those paid to keep company assets such as machinery, tools, vehicles, buildings, etc. This covers pay for the repairers, inspection fees, repair materials, and charges.

13. Benefit and Payroll Expenses

D deductions are allowed for all employee expenses, including salaries, wages, bonuses, and even perks received. You can also deduct various other reasonable expenses including workers' compensation insurance, payroll taxes, payments to retirement plans, and employee health insurance.

14. Office Tools and Mail Order Processing

Among these are office printers, your internet connection, paper and writing tools you use there, stamps or other supplies you use to mail goods and services to your customers.

15. Overhead: Credit card and business loan interest

Only the portion of the loan or credit card payment made toward interest if you borrowed money to start your company.

16. Seminar Notes and Ongoing Learning

These costs are covered whether you or any of your staff members participate in a program of additional education or go to business seminars. This covers trade exhibits and industry-specific norms within the sectors you deal with.

17. Donations to Charitable Projects

Through charitable contributions to 501(c)(3) organizations, companies can claim a deduction of up to 10% of taxable income. Such could show up as a monetary gift, goods, raw supplies, or availability of corporate assets or infrastructure.

See Your Tax Representative.

This quick overview lists some of the main tax incentives and deductions available to small companies. Naturally, every business is somewhat unique in terms of taxes. Consult a small business CPA or tax preparer to help find strategies based on operational type, business type, formation legal structure, and state regulations, that might help lower taxes. It is important to realize that proactive taxation can help your company save a lot of money over time.

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