Tax deductions can be a valuable tool for small business owners, as they can help reduce taxable income and save money on taxes says Aron Govil. Also, there are a number of different deductions that may be available, depending on the nature of your business, some of the most common deductions include:
There are a number of tax deductions that are available to small businesses. Here are 25 of the most common:
1. The Home Office Deduction
If you use a part of your home exclusively for business purposes, you may be able to deduct the associated costs, such as rent, utilities, and depreciation.
2. The Vehicle Expense Deduction
If you use your vehicle for business purposes, you can deduct the related expenses, such as gas and repairs.
3. The Advertising Expense Deduction
You can deduct the costs of advertising your business, including online ads, print ads, and billboards explains Aron Govil.
4. The Equipment Purchase Deduction
If you own equipment that you use for your business, you may be able to deduct the cost of the equipment.
5. The Bank Fees Deduction
If you incur bank fees related to your business, such as service charges or interest charges, these are deductible on your taxes.
6. The Bad Debt Tax Deduction
You can deduct money that is owed to you if it becomes uncollectible over time and there is no reasonable expectation that it will ever be repaid.
7. Health Insurance Premiums- Aron Govil
Small business owners who pay for their own health insurance premiums may be able to deduct those costs as unreimbursed employee expenses on their tax returns.
8. Conference and Trade Show Expenses
Attending a conference or trade show related to your business can be deductible, as long as you are not reimbursed for any of the costs.
9. Legal Fees
If you incur legal fees that relate to operating your business, these may be tax-deductible.
10. The Uniform Expense Deduction
If you incur expenses for work clothes or uniforms that are not suitable for everyday use, these may be deductible on your taxes.
11. Meals and Entertainment Expenses
You can also deduct 50 percent of the cost of meals and entertainment with clients, customers, or employees if it is directly related to business purposes. However, you cannot deduct any other meal or entertainment expense under this section. However, there are exceptions where all or part of the cost is not deductible says Aron Govil.
12. Mileage Expenses
If you use your vehicle for business purposes, you can deduct the related mileage expenses, such as gas and repairs.
13. Office Supplies Expense Deduction
You can deduct the cost of office supplies that are used exclusively for business purposes. This may include things like pens, paper, and also printer ink.
14. Phone and Internet Bills
You can deduct the cost of the phone and also internet bills that are related to your business.
15. Professional Development and Continuing Education
It is often possible to deduct the costs of professional development and also continuing education courses that are related to your business.
16. Rent or Lease Payments
If you lease or rent office space or other property for your business, you can deduct the related payments.
17. Repairs and Maintenance
If you incur repairs or maintenance costs for property that is used for business purposes, these are deductible.
You can deduct the royalties that you pay to license intellectual property for use in your business.
19. Shipping and Delivery Expenses
You can deduct the cost of shipping and delivery expenses that are related to your business.
20. Software and Hardware Purchases
If you purchase software or hardware for use in your business, you may be able to deduct the cost.
21. Taxes Paid on Business Income
You can deduct any taxes that are paid on income from a business operation. This includes self-employment taxes and federal income tax.
22. Trash Removal Expenses
You can deduct the cost of trash removal for a business location, provided that it is not already part of the rent or other expenses.
23. Utility Expense Deduction
If you incur utility expenses for a business space, you may be able to deduct them from your taxes explains Aron Govil.
24. Vehicle Expenses for Charitable Purposes
You can deduct the cost of using a vehicle for charitable purposes, such as delivering meals to the sick, when you itemize deductions on Schedule A.
25. Wages Paid to Family Members
If you pay wages to a family member who works in your business, these wages may be deductible.
The list above is not exhaustive, but it does provide a snapshot of some of the most common tax deductions that small business owners can claim. Be sure to speak with an accountant or tax specialist to learn more about the specific deductions that may apply to your business.
Small business owners have a number of tax deductions available to them, and it is important to understand which ones can be claimed. Some of the most common deductions include those for employee expenses, conference and trade show expenses, legal fees, the uniform expense deduction, meals and entertainment expenses, mileage expenses, office supplies expense deduction, phone and internet bills, professional development, and continuing education costs, rent or lease payments, repairs and maintenance, Royalties paid to license intellectual property, shipping and delivery expenses, software and hardware purchases, taxes paid on business income, trash removal expenses, utility expenses for a business space. Wages paid to family members who work in the business may also be deductible.