Tax time can be a troubling thing for new business owners, but careful consultation with the Tax Group Center professionals can help alleviate some of the stress. Entrepreneurs are often so eager to get their business running and so busy making decisions about marketing and product investments that they forget the long term benefit or consequence of a decision. The Tax Group Center knows how important it is for small businesses to save their money or hang on to whatever financial resources they have. It’s especially important for owners of small businesses to understand their tax bracket and see how their business taxes will impact their personal taxes.
1. Repairs. You might not consider the plumbing expense for a leaky office toilet an investment, but according to the IRS, ordinary repairs and maintenance costs are deductible expenses. If there are construction efforts that add to the property value, the costs are usually recovered through depreciation. There additional safe harbor rules that can provide an immediate deduction.
2. Fees or Commissions. Whatever you are offering your employees by way of commissions can be deducted as expenses unless they are in conjunction with buying a property. These costs are usually included and recovered through the depreciation process. Fees for operations can also be listed as deductible expenses.
3. Travel. If you have staff that travels out of town for business, such as to a sales or networking event, or if you travel to promote your company interest, these costs can be deducted on your tax return. Lodging, airfare, or car rental are all acceptable expenses. There are, however, substantiation requirements that must be met to claim this deduction, and local commuting is not usually allowed.
4. Advertising. If you use a marketing or advertising firm or if you host your own website, advertising costs are allowed as deductible expenses. Business cards, promotional items, radio or television ads, and social networking advertising services can be included in your year-end expense claims.
5. Home Office. There are many small business owners who don’t have the resources to rent a separate office space and use their home as their primary office space. A portion of the expenses may be considered deductible when the home office is exclusively used for the purpose of conducting business. These deductions include direct costs to prepare the space and the indirect costs like percentages of the mortgage, real estate taxes, and utilities. Your tax preparation specialist can provide the details.
6. Professional Fees. The price you pay to retain a lawyer or an accountant can be claimed as deductible expenses. The cost to use a tax preparation specialist is also allowable.
7. Meals. Although a little trickier to understand, costs for meals can either be fully deductible or an allowance up to 50% can be claimed. In other words, taking a client to lunch could be half your cost and half Uncle Sam’s. Whatever you claim must be substantiated.
8. Rental Costs. If you lease your office or operating equipment, these costs can be written off through taxes. This included vehicle leases, copy machines, or large manufacturing items.
9. Business Debt. Your whole debt can’t be used as a tax deduction, but the interest charges for the debt or account can be claimed. If you have a line of credit or a company credit card, the interest fees for the year can be a part of your expense claim. There are some limitations for businesses that conduct more than $25 million in gross receipts.
When it comes to tax season, it is a prime opportunity to find out the monetary return on investments made throughout the year. Although these areas don’t carry as many benefits as do larger deduction of insurance premiums or employment costs, these nine areas of expenses are often ignored by small business owners. This leaves money on the table when it comes to your business tax return.