Small Business Tax Deductions!
starting a small business
you want to be sure you know what small business tax deductions you can take.
As with any income, we all know we have to pay taxes, but the good news is you can potentially reduce your taxable income significantly when you know all the deductions you’re entitled to as a business owner.
You want to capture all business expenses cost of carrying on a small business. All business expenses are usually tax deductible when you are operating a business to make a profit.
How do you know?
To help you determine whether it can be a business deduction you want to ask yourself, is the expense both ordinary and necessary.
Because the IRS says "for any business expense to be deductible, it must be both ordinary and necessary."
1. An ordinary expense is one that is common and accepted in your trade or business.
2. A necessary expense is one that is helpful and appropriate for your trade or business.
An expense does not have to be indispensable to be considered necessary.
Here are a couple of tax deductions many small business owners can take:
When starting a small business, you can work out of your home and get a tax savings at the same time. In order to take the home office deduction, you must use your home office regularly and exclusive for your business. It should also be used as your principal place of business. You may be able to deduct mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes. Deduction for home offices are based on the percentage of your home that you use for business.
As a small business owner, you can deduct automobile expenses for any related business travel. This includes visits to your clients, customers and meetings away from your business workplace. So keep a mileage log to ensure you don’t lose track of any mileage. When figuring expenses, you can choose the standard mileage rate or you can deduct your actual automobile expenses for gas, oil changes, repairs, tires, maintenance, insurance and registration. However, if you go with the actual expenses, you will need to keep a log of all trips showing the date, purpose of trip and the miles driven. You also want a record and receipts of your all gas purchases, insurance payments, registration, maintenance and repair costs to justify all your deductions.
These are just two of the many tax deductions a small business owner can take, but there are many more. See the
irs.gov business page
for a list of all allowable small business tax deductions.
You want to make sure you take full advantage of all the tax deductions you are entitled to as a small business owner.
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