Every business has to pay taxes, but fortunately enough for you, there are ways to reduce the amount that you are required to pay. Not all of your expenses will be deductible, so it is important that you understand what can and cannot be deducted. This will prevent you from attracting the attention of the IRS and save you thousands in future penalties and fees. If you are looking for deductions, examine the following checklist of commonly deducted small business expenses.
1. Software: Any software that helps you to run, maintain, or develop your business is usually eligible for a deduction.
2. Repairs: If you had to make repairs on business equipment, such as computers or printers, you may be allowed to write the cost off as a deductible.
3. Rent or Mortgage: If you run your business from home and use the room exclusively for those purposes, you can write off your home office.
4. Employee Compensation or Wages: If you employ workers, the pay, benefits, and compensation that you provide them with may be eligible. You should consult tax regulations and guidelines before attempting to do this.
5. Charity: Any charitable contributions can potentially be deducted. This is great if you own a company with a strong community presence.
6. Financial Institution Fees: Any fees from private, commercial, or investment banks can be classified as deductions.
7. Shipping Fees: If you spend large sums of money on postage fees and shipping costs, you should ask your accountant whether or not they can be deducted.
8. Travel Expenses: All business-related travel can usually be deducted. For this reason, it is important to keep all of your travel documents and receipts in order to show that the trip was for business purposes.
9. Educational Expenses: In order to assist employees and strengthen their business, many employers provide their workers with education-related financial assistance. If you do this, remember to retain and organize all receipts and institutional documents.
10. Advertising: Any money that is spent on advertisements that are intended to increase your revenue will usually be deductible. This includes commercial, internet, and print ads.
11. Business Supplies and Equipment: Any item that is purchased for your business is eligible for a deduction, no matter how small. It is important to note that these items must be used exclusively for business-related purposes.
12. Moving Expenses: If you relocated your business during the previous year, you may be eligible for a deduction.
13. Debt: If your business has accumulated a sizeable amount of debt, it may be eligible for a deduction. This only applies to businesses that sell goods, not services.
14. Parking Fees and Public Transportation Costs: This can be exceptionally beneficial if you live in a large city with little to no free parking.
15. Utilities: Water, electricity, internet, and other utilities may be deductible during tax season.
16. Business Publications: If your business circulates a paper or electronic publication, such as a magazine or coupon book, you should include this in your tax information.
17. Theft Losses: Any losses that are incurred due to theft are sometimes deductible. If you plan to deduct theft losses, you should keep all of the proper legal and financial documentation.
18. Professional Fees: If you had to hire outside workers to perform services for your business (ex: cleaners, painters, caterers) you should keep the appropriate records.
19. Auto Expenses: If your personal vehicle is used for business purposes, any related expenses are usually deductible. These deductions can be calculated using the number of miles you travel or receipts from any maintenance or repair services.
20. Licenses, Permits, and Membership Fees: If these expenses are related to your business, they will usually be deductible.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.