Keeping Taxes in Check: Write-Offs for Your Small Business
Tax season is almost upon us. Many of you will probably be looking at getting your taxes done earlier, so you can know exactly what you’re expected to pay before it’s time to write the check. Getting a handle on the tax deductions you can take will help you to figure out your costs, as well as learn where you can trim some proverbial fat. Here are 15 deductions for your business to keep an eye out for.
Driving around for work can get expensive. If you’re a business owner, then it’s assumed some of your car use will be for work. There are a lot of ways you can keep track of that. In fact, there are even apps that will help you track and log your mileage for work. If you don’t have a car, then you can also factor in public transport expenses.
A lot of your assets are subject to depreciation. If you have a warehouse and you use large equipment, those items will depreciate. You’ll find the same thing happens with technology and transportation. If you’re trying to factor in the depreciation on your car, you have to be careful and only use the time that it’s applied to work.
Necessary office expenses include things like desks, furniture and internet. It can also include a cleaning service if you have one. These costs are relatively basic, but it doesn’t mean you should replace your desk every year. You only get a percentage back, so buy what you need and nothing more.
If you have employees, you have to pay them something. Those wages can be tax deductible, but they have to be claimed separately from the employee benefits and benefits programs.
Employee Benefits Programs
Employee benefits programs are a diverse group. This can encompass any program your company offers that benefits your employees, such as tuition reimbursement or health insurance. Those same plans that apply to you are not deductible, but the others are.
If you’re doing advertising, you can get a deduction for it. This includes the cost of production and distribution of those items, including everything from flyers to pop-up ads. It would not include a Christmas party, even if you invite prospective clients. To be considered advertising, the object has to be branded.
Meals and Entertainment
Selling your products or services takes an investment, and that can occasionally mean you need to wine and dine someone. Dinner out to discuss a contract or meeting a contractor to go over fees both count as a business meal. Your personal meals, even when on the clock, do not.
Any travel you do for work is tax deductible. This will be a different category from car expenses and will include things like plane or train tickets, hotels and rental cars. Meals while traveling are not included unless they involve work, and even then would be listed under meals and entertainment instead.
Any time you hire a contractor or outside expert for your business, like a lawyer or accountant, you can deduct the costs associated with those services from your business taxes. A CPA to help with business taxes will help you save money in the long term because they already know how to navigate our complicated tax code.
If you have an interstate business, you’ll need to pay taxes in all of the states you do business in. Having a CPA to do the work for you can help you avoid trouble with those situations, and their work can be a tax deduction on its own.
Commissions and Fees
Any fees you might have to pay to non-employees to generate revenue are also deductible. These might be considered agent fees. Many companies make use of freelancers and use this deduction for them.
Having business insurance is common sense. Making it deductible is an incentive from the government to employ that common sense. If you don’t have it, get it. If you’ve got, then claim the deduction.
Pension Plan Contributions
If you make any contribution to your employees’ pension plans, like matching a certain amount they put in, you can claim a deduction for it. This applies to profit sharing and 401Ks or whatever other kind of pension plan you have. You cannot claim a deduction for your own pension plan, though, only your employees’ plans.
Rented or Leased Equipment
Sometimes you don’t want to buy a large piece of equipment outright. Or, if you’re considering buying one, you may want to rent it first to see if it will fit your needs. In that case, it can still make the tax deductions part of your form, without you having to complete the entire purchase. This can go so far as to include leasing buildings and land, especially if you need new office space, but they fall into separate categories.
Utilities you use for your office can also be deducted. These include the things that make the space useable, like sewer, water and electric. Garbage and snow removal can count, too, if you use them.
If you started your business this year and you kept track of everything during such a stressful, exciting time, then you may be able to take startup costs as a deduction. This can include a lot of the items listed above, but they must either be a cost you paid to get your business up and running or an expense from the day before your active business began.
Knowing where to start with deductions can give you a solid base for getting your taxes done. They are involved, but you can make it work for you if you put in a bit of work.