When it comes to filing taxes, there are many ways small businesses can save money. Small business owners can take advantage of different tax deductions and place their saved dollars back into their business. Whether you work from home, an office, or a vehicle, here are some ideas to consider. Added together, these costs can lead to big savings!
Travel Tax Deductions
There are small tax deductions available for expenses of a work related trip. Expenses include airfare, meals, car expenses, and shipping supplies. For the trip to qualify for deductions, you must be away from your regular workplace for longer than a day, and require overnight accommodations.
Location Tax Deductions
You can deduct all mortgage interest if your business owns it’s own building. Even small food stands qualify.
Moving expenses may be deducted from your taxes if you were required to move more than 50 miles to start your business. Specific costs that may qualify include packing, transportation, travel, utility, and service connections. Security deposits and meals paid for throughout the move are not deductible. For these deductions to qualify, you must remain employed at the business for at least 78 weeks out of the following two years.
Service Tax Deductions
Loan Interest & Debt
You may file a small business tax deduction for interest built on a business credit line. However, if you build interest on a personal loan that you use towards your business, it is more difficult to file. Check with an IRS professional to be sure you filed correctly. Bad debts are also tax deductible if you advanced money to an employee or service without receiving the goods or payment contracted. Bank charges are also deductible, such as fees for holding a business account and ATM service fees.
Disaster and Theft
If your business has suffered from theft or loss from a natural disaster, you can deduct losses that weren’t covered by insurance.
If your business sells goods, then you may deduct the goods that you have no yet been paid for.
Work related education services such as seminars, training, and workshops may qualify for deductions if their purpose is to improve job skills. They are especially likely to qualify if they are required to maintain a professional license.
Advertising and Marketing
Most advertising and marketing expenses for small business qualify for deductions. This includes websites, business cards, flyers, commercials, print, and billboards. The main exception to this deduction is political advertising, which is usually not deductible.
Tools and Resources Tax Deductions
Inventory is only sometimes deductible when treated as supplies and cash based accounting is used. For example, a pizzeria buys toppings as inventory, but sell the toppings as products.
Intellectual property such as licences and trademarks can often be deducted. Licencing fees are usually considered capital expenses and therefore are depreciated over multiple years. Trademarks can be deducted within the same year.
If you made energy efficient changes to your place of business such as solar hot water heaters, solar electric equipment, or wind turbines, you may qualify for a deduction. These improvements can be claimed with Form 5695.
Phone and Internet
Phone and internet expenses used for your business are deductible as long as they are not for personal use. If used for both business and personal, then you can only deduct the percent of usage used for business.