With nearly 28 million small businesses in America, entrepreneurship shows no signs of slowing down. Whether you’re in the initial stages of drawing out your business plan or own several, thriving companies, navigating taxes is a critical skill everyone needs to know.
Learning the top small business tax deductions can save your company serious money every year.
Let’s get into the first four on the list today – then come back for deductions 5-8 next week!
- Business-Related Travel
You probably know that you can deduct business-related travel, but are you accounting for all the deductions available to you?
For example, the IRS states that you can deduct the following travel-related expenses:
- driving costs (mileage, parking, tolls, company or rental cars)
- transportation and accommodation costs (flights, hotels, meals, baggage)
- laundry and dry cleaning
- telephone expenses
If you travel often for business, it’s important to keep meticulous tracking of your expenses and receipts. Talk with a professional if you’re combining personal and business-related travel, as deductions may change.
- Self-Improvement Expenses
One of the most advantageous small business tax deductions you can take is the cost of improving your own knowledge and education.
For example, you can deduct the costs of books, classes, and training manuals related to your specific niche and industry.
Please note that these deductions account for maintaining current skills (not switching careers in the future).
Any membership associations, professional certifications, or dues can be deducted as well.
- Start-Up Costs
We all know that starting a business is both stressful and expensive.
If it’s your first year of business, the government tends to reward you for your entrepreneurial visions. Currently, you can use up to $5000 in small business tax deductions for your startup expenses.
Typical costs you may incur include:
- Accounting and legal fees
- Researching potential markets or products
- Costs related to obtaining customers or distributors
You can deduct fees related to hiring new employees, such as uniforms, recruiting costs, or training manuals.
You can also deduct any fees related to the actual workspace, including office rent, licenses and permits, utilities, and buying or renting business equipment.
To qualify, you’ll need to identify when your new business began (the start date).
Because start-up costs can be somewhat complicated and confusing, it’s best to consult with a tax professional before venturing into this deduction.
- Equipment Costs
Typically speaking, you can deduct any equipment solely used to run your business. This is a broad category and can include expenses like:
- Electronics (cell phones, computers, printers, televisions)
- Office furniture
- Relevant safety equipment
- Office supplies (paper, ink, bookcases)
The rule of thumb is typically this: if you’re using it exclusively for business-related purposes, the items are considered small business tax deductions.
Be Smart about Small Business Tax Deductions
When you’re running a small business, you’re juggling a never-ending to-do list of tasks and appointments. With the True Resolve Tax Professionals, you’ll have an expert who’s passionate about helping you save money. Stay tuned for the second half of our list, coming soon!
Want to learn how you can lower your tax bill now? Schedule a tax discovery session with us today.