Top Tax Deductions for Small Business Owners
One of the benefits of being a small business owner is the tax deductions that are available. The more tax deductions that you have at the end of the year, the less you owe in taxes…..plus you could even walk away with a few extra benefits. It seems that many small business owners are not aware of important tax deductions that could greatly benefit them. Have you ever wanted to take a holiday, part business and part vacation? Believe it or not, it can be a tax deduction. The same goes for that nice car you may have been wanting. Here is a list of 7 Tax Deductions for Small Businesses.
- Automobile Expenses – Your business can own its own automobile or, if you use your car for business, you can deduct some of the costs associated with driving. Basically, you have two choices:
- The Actual Expense Method would require you to keep a log and track all business related expenses.
- The other option is the Standard Mileage Rate Method. Each year a standard mileage rate is given. In 2013, the rate is 56.5 cents per business mile (up from 55.5 cents per mile in 2012). Just calculate how often you use the car for business purposes. Many people do not deduct their auto expenses even though it is a great way to save money!
- Technology and Office Supplies – Small business owners are frequently buying new computers, scanners, phone systems, and countless other items that are part of running a productive shop. Although many people are not aware of it, most of these items can be fully expensed. Just keep an account of all purchases and discuss with your CPA or tax advisor any items that might be used for personal use as well.
- Mobile Phones – Just a few weeks back I upgraded phones and got a wonderful new phone on our business account. Nowadays, cell phones are used all of the time to do business all over the world. Plus, the IRS issued a new ruling stating that business owners can write off 100% of their cell phone costs as long as they have an established home phone line.
- Business/Leisure Travel Trips – This happens to be one of the most underused deductions for business owners. This is strange because travel expenses are 100% deductible, while other items like the usual entertainment expenses and meals are only 50% deductible. Yes, this includes hotel, airfare, train costs, rental cars, taxis…….
- Meals and Entertainment – This is another deduction that is that is not used as often as it could be! Any meal or coffee taken for business purposes can be written off. What if you do not have the receipt? Relax, if it is under $75 you usually do not need a receipt. Plus, it is easy to keep track of records from bank accounts and credit cards bills for write offs as well.
- Charitable Contributions – If your business is an LLC, a Partnership, or an S Corporation, you can make charitable contribution to the charity of your choice and simply pass it on to yourself to be claimed on your individual tax return.
- Advertising and Marketing Costs – Ordinary advertising and promotion of your business is deductible as a current expense. Think business cards, yellow page ads, or sponsoring that little league game.
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