Small Business Tax Deduction

Do you know the different  between small business tax deductions and credits that are available to you? The most effective way to protect yourself from paying too much in taxes is to get educated about these different methods. Learning how to manage things around you can lower your tax bill and can really save you in the end on things you are already doing.

A small business owner is responsible for many things, such as managing cash flow, tracking expenses, and creating tax record systems.  If accurate documentation and records are maintained, small business owners can take advantage of tax deductions.  Because these tax deductions are so important for saving money. When you're totaling up your business's expenses at the end of the year, don't overlook these important business tax deductions



1- Not saving receipts under $75 -  Many people have been told that they do not need to keep receipts for small purchases. Technically this is true. However, if you plan on deducting your purchases, you will need to know exactly what you bought and how much the total was.  Just because the IRS does not require receipts for entertainment and meal expenses under $75, that does not mean that it does not matter.  You are still required to record these expenses.  What easier way to keep a record than to just save the receipt?  The receipt has everything you need already on it.

2- Not tracking reimbursable expenses - Sometimes a small business owner will pay for business expenses out of his/her own pocket.  Although this is acceptable, a mistake is made when the expenses are not recorded.  How can you be reimbursed for expenses you did not record?

3- Moving costs – If you move for your business and your new place of work is at least 50 miles further from your old home than your old workplace was, this is deductible.

4- Categorizing equipment with supplies -   Most small businesses are allowed to write off $24,000 in capital expenditures for personal property, such as office furnishings and computers, the year it is purchased.  Equipment is a capital expenditure.  These purchases should be correctly documented.  If you document your computers and other distinguished capital expenditures as supplies, you can be denied a deduction for improperly categorizing.  In addition, you could be forced to add the property cost to the overall investment in your business.

5- Miscalculating automobile deductions - There are different ways to calculate the deductions for the business use of your car.  For one, you can use the standard mileage deduction per business mile or the actual expenses, including depreciation of the car.  However, you are not allowed to claim both mileage and depreciation. If you drive for business, the IRS wants to give you some of your money back.  So keep a notebook in your to record the date, tolls, parking costs,mileage and the purpose of your trip.

6- Giving more than you can receive tax-wise -  The IRS only permits $25 worth of gifts to any individual each year.  Any other expenses in gifts will not be deductible.

7- Interest and carrying charges – Any interest or carrying charges when using credit or a personal loan to finance business purchases are deductible.

8- Employee benefits – Health insurance plans, educational assistance, and life insurance for your employees are all also deductible.

9- Utilities - The water, power, trash, and telephone bills at your office are all 100 percent deductible as regular business expenses. If you have a phone line that has a mix of business and personal calls, When your bill comes in, circle the business-related calls, total them up and keep a copy.
You can deduct the cost of the business calls that you make for business from home. At the end of the year, tally your 12 bills and deduct 100 percent.

10- Licenses - License fees, as well as regulatory fees, are deductible.

11- Other Deductions - Other common small business tax deductions can include office supplies such as business cards or printer paper, retirement plan costs, employee payroll, interest on business loans, and business-related books or education. To maximize the tax deductions for your small business, consider consulting with a professional tax advisor or Certified Public Accountant.