Top Deductions for Small Business Owners

Top Deductions for Small Business Owners

Tax deductions help businesses to reduce their taxable earnings and potentially save money. Listed below are the top ten small business deductions. Most are self-explanatory, but feel free to reach out to our office should you have any questions.

  1. Advertising

If you spend money to advertise and promote your business, keep those receipts. The IRS will allow you to deduct almost all of your expenses for advertising.

  1. Business Insurance.

Most small businesses have mandatory insurances, whether it be liability or work/auto/etc. In the course of doing business, these costs are all deductible.

  1. Vehicles.

Whether you use a ‘business’ vehicle or a ‘personal’ vehicle, if you use it for the business, then it is deductible. Track payments, miles, repairs and fuel costs, and work with your tax preparer to accurately claim these deductions.

  1. Capital Expenses.

Capital expenses can be complicated, but simply put this category is used when your business purchases new equipment or assets. There are limits, so be sure to work with your trusted tax preparer.

  1. Cost of Goods Sold.

You have to spend money to make money, so why not lower your taxable income? Calculate the initial amount that it cost you to acquire your good or service. This will demonstrate the difference between your gross profit and your net profit, lowering your taxable income.

  1. Employee Wages.

If you have employees, you can deduct the wage or salary that you pay to each one of them. However, if you hire contractors or freelancers, you cannot deduct these costs because they are not truly employees of your business.

  1. Health Insurance Premiums.

With 25 employees or less, you may qualify for this small business deduction, if you provide group health insurance to your employees.

  1. Home Office Costs.

The trend of ‘working from home’ only continues to grow. While your commute just got shorter, this deduction allows you to write a portion of your home off as a ‘home office’. If you can prove that your home office is your primary place of business, then additional deductions may be available.

  1. Rent.

Many businesses rent office space or warehouse facilities and pay a monthly fee for their occupancy. This is another cost of doing business that can be deducted at tax time.

  1. Utilities.

To keep your business going, you need basic things like running water, electricity, heat, internet, etc. Your utility costs are deductible so long as these costs are being used for the operation of the business.

There are plenty of other deductions, but as mentioned, these are the top ten in our opinion. Feel free to contact Veloce today to learn more or to sit down for a no-obligation conversation about anything related to Top Deductions for Small Business Owners.

 

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