If you own a small business, you may be wondering how you can reduce your taxable income and save some money at tax time. Below are some of the best deductions currently available to small businesses.
New equipment purchases.
If your small business invested in new equipment, you may be entitled to a tax deduction. With most equipment purchases, you will have the option of either deducting the full cost of the equipment all at once or depreciating it over several tax years.
Most small businesses will purchase a variety of office supplies throughout the year, from printer ink to paper towels. To reduce your tax liability, be sure to keep all of the receipts and deduct the total cost of your office supplies from your taxable income.
If you are self-employed, you will be paying more Social Security taxes than if you were employed by another company. However, you can deduct half of these taxes on your return at the end of the year.
If you travel for business purposes, you can deduct these expenses from your taxable income as well. Most expenses, such as the cost of your hotel or your plane tickets, will be fully tax deductible. However, you can deduct only 50 percent of the cost of meals purchased for business purposes.
Cost of advertising.
Many small businesses invest in advertising throughout the year in order to attract more customers and increase profitability. For example, you may film a commercial for local television, print business cards and/or purchase newspaper ads. In most cases, advertising expenses can be fully deducted from your taxable income, regardless of the structure of your small business.
Fees associated with credit.
If your business borrows money to finance its activities, you can typically deduct the associated fees. Examples include interest and other finance charges.
Home office expenses.
Self-employed taxpayers can deduct home office expenses from their taxable business income. In order to claim this deduction, the space in your home that you designate as a home office must be used exclusively for business purposes.
Many small business owners hire professionals to assist them in the operations of their business. For example, you may hire an accountant to handle your bookkeeping or a lawyer to help with contracts. The fees associated with these services are usually tax deductible.
These are just a few of the tax deductions available to owners of small businesses. For more small business tax advice, please contact Padgett Business Services today.
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All content posted on this website or distributed by SmallBizPros, Inc. DBA PADGETT BUSINESS SERVICES is intended for informational purposes only. To determine whether these concepts are appropriate for your business, you should seek advice from a PADGETT BUSINESS SERVICES® representative or an independent advisor before implementation.