A lot of small business owners don’t take tax planning seriously. It is overwhelming and it is a boring topic so a lot of people avoid it. It is a very easy predicament to get into and just say “I’m not gonna talk about tax, I’m not gonna worry about it, and if I do, it will be that one time in a year when I call my account manager to do my taxes”. The sad part is that it’s a big mistake you’re making because it is a large expense on small business and if we don’t take it seriously and do better planning, it can cause the collapse of your business.
It is also something that can create a lot of stress for you, therefore it is sad that most people don’t take it seriously and give it the attention it deserves. So many people sadly do not take advantage of those basic deductions in small business that they are allowed to. The provision in the tax law says that if those basic deductions are related to business so we can write them off.
Business deductions are company expenses, generally you pay tax on your business’s profit not revenue, so if you make $10 and have expenses of $4($10-$4=$6) you only pay taxes on $6, this means that the more expenses you record the less taxes you will pay.
It doesn’t matter whether you’re just starting or you are an established entrepreneur, saving thousands of dollars is absolutely achievable through tax deduction. Below are the 10 small business expenses that are tax deductible;
- Vehicle Expenses: You’ll have to purchase/pick up supplies, find new locations, drop off supplies, don’t forget you have to pick up lunch for yourself and your employee.
The cost of gas or fuel consumed during pick up or supply can be deductible. The cost of fuel consumed during visits to client for meeting is not left out as well
- Admin Expenses: Admin expenses such as business license, certification, and entity formation, not to forget business insurance could be written off by keeping a detailed record of them.
- Home Office: This has to do with cost associated with running the business from your home some home expenses are completely deductible if only you are working from home, a portion of your rent, mortgage interest, utilities such as; electricity, water, gas, trash, sewer, HOA fees, maintenance or home repairs and even home improvement. These expenses based on the percentage of the square footage in your home used exclusively for business.
- Operating Expenses: There are things that entails running a business efficiently, such as supplies, the cost of advertisement that involves creating promotional materials; radio advertisement, Facebook advertisements, banner advertisements and yellow pages are absolutely deductible.
- Travel Expenses: You can write off a part of the flight fare that you spent to and from a business trip. The meeting with the customer, vendor, a conference, maybe an annual corporate meeting, the money spent on laundry, Lodging, fax charges. Thus your travel should include record of the money you spent on a business trip.
- Dinning: Make sure you’re tracking all those meals by yourself when you are traveling or when you’re talking business with someone.
- Technology: Your gadgets, yes, you need that gadget for your business; your smartphone, laptop. Internet charges form your ISP, phone Call charges are deductible if it is frequently used to contact your customers or clients, and money spent on these are completely deductible.
- Materials for educational purposes: Books bought for educational purpose, to learn new skills or improve on an existing skill that would have direct influence on your business. The fee paid for a professional program/course that is related to your business are completely deductible.
- Employee Expenses: Of no doubt, most small business owners have employees which are paid on monthly basis, at such, wages paid to them are deductible. Your income should be reported IRS in order to deduct your employee business expenses.
- Assets/Equipment: These are the items that are used over and over again anytime your business is open for customers. The equipment you use on daily basis and the cost of its maintenance can be deductible.