Knowing what aspects of the business can help reduce the tax from any line of business, whether it is a small, medium or large enterprise. Although tax season has already ended, there should be no room for playing taking note on expenses or items for possible tax deduction on a business. Compiling all possible receipts will greatly decrease the potential stress when tax season returns.
It is mandated that you pay the proper taxes, but paying less or more than the required amount of tax is not. And while it is still early, it would be in your best interest to know any specific or unique deductions that can be applied. There’s a plenty of deductions that can now be applied to small businesses made by the Congressional legislation.
You can use the following as a guide in tax deduction for your small business:
- Automobile expenses. You can either use to standard mileage rate to be deducted or calculate vehicle costs though actual expenses. The latter would include parking tickets, gas costs and toll fees.
- Office materials and furniture expenses. Always keep the receipts that you have when purchasing office supplies because these are mostly considered as expenditures that can balance any taxable income from the business. For the furniture costs, you can either subtract 100% from the price in the date of purchase or use depreciation value. In this way you can deduct a portion of the furniture costs in 7 years.
- Utility bills should always be deducted because these are identified as regular business expenses. These bills pertain to your phone, water, electricity and trash bills.
- Education. Seminars attended, books, magazines and even DVD’s that are purchased but are relevant to the business is 100% tax deductible
- Legal expenses. These are fees from lawyers, accountants or any professional that where consulted for the business.
- Health tax credits. If the business is paying even just half of the worker’s healthcare, up to 35% of the amount paid for the employee’s insurance is qualified for a tax credit.
- Travel costs. Some percentage from a business trip can be credited from tax. This will comprise from food, plane tickets and hotel accommodation during the travel period.
- Maintenance and repairs. Secure any receipt such as air conditioner maintenance or repair costs from any equipment that has been fixed.
- License expenses. But of course, you can’t operate your business if you do not have any license to do so. No need to worry about it though because license fees, regulatory fees are deductible from tax.
- Contributions to charity. Donations made to any charity institution can always get a tax credit. Ensure the letter from the organization to validate the donation that was given.
These are just a few from the many expenses to keep track for tax deduction in a small business.
Sean Harris is a business and finance blogger who is currently living in Miami Florida, you can see more of his writing here.