Owning a small business has a variety of benefits. You get to be your own boss, you get to do something you love, and you get to work for a company that you’re proud of. Along with the personal and professional benefits of running a small business, there are also challenges that you need to address. One of the biggest ones is business taxes. There are many different tax deductions you can claim, but with the help of an online tax calculator, as well as any other tax help tools, things are becoming a lot easier.
Some small business owners worry about the company’s finances, such as the overhead costs of owning a small business, and they also worry about doing the company’s taxes, as they’re afraid of what they may owe. But if you want to see a lower amount due, here are five small business tax reductions you should absolutely not ignore.
1. Personal Vehicle for Business Use
Some small businesses have company cars, but some business owners simply use their personal car for business purposes, whether traveling to and from client meetings or making business-related deliveries. No matter how you use your personal vehicle for your business, you can write it off by either deducting the actual costs you incurred using the vehicle for business, or by deducting your business mileage based on the IRS rate. You can even write off tolls and parking charges. Just be sure to keep accurate records.
2. Home Office
Running a small business out of your home has its tax advantages. In order to claim your home office on your taxes, though, you need to have a designated area in your home that is solely used for business purposes, whether an office space or a garage. If so, you can claim this on your taxes, including other expenses, such as Internet, rent (or a part or your mortgage), phone bills, and even insurance.
3. Business Travel
Business travel and even entertainment expenses can be written off on your taxes. Any travel expenses you incurred, such as plane, bus, or train tickets, as well as any lodging you paid for, can all be claimed on your taxes. You are also able to claim entertainment expenses related to the business. So if you take clients out to dinner, baseball games, shows, or any other forms of entertainment, be sure to keep your receipts, as all of this can be claimed for the business.
Any equipment purchases you made for the business can also be written off on your taxes. For example, if you run a delivery business and you bought a truck, this can be written off. If you make t-shirts and you had to buy a t-shirt printing press, this can be written off on your taxes. Not only can the physical equipment be written off, but any other business-related items can be written off too, such as software for small business (like financial software, accounting programs, payroll programs, etc.) and office supplies. Again, just be sure to keep your receipts.
You can personally write off donations you make, and so can your business. If your company donated money to a charity, be sure to write this off on your taxes. As long as the money isn’t being “donated” to a single person, you can claim it on your taxes. (So no, you can’t “donate” money to your spouse.) If your company hosted a charity event, you can also claim the cost of the event on your taxes as well. Just know that this information will need to be itemized, so keeping detailed receipts is the best way to claim these donations successfully.