If you own a small business, there’s a good chance that many of your expenses qualify for a tax deduction.
It’s worth noting, however, that your businesses’ ability to claim these deduction changes over time and certain rules apply to most of these deductions. This is why it’s good to do your research and keep up with the current tax trends.
Once you’ve got a good grip on what is expected of your small business and its expenses for this fiscal year, let’s take a look at some things that can be deducted.
- Accounting and Bookkeeping
While you’re a small business, you may still decide to hire someone to do your accounting and taxes for you. It’s never straightforward, so bringing someone in to crunch the numbers can make a difference to how you manage your time.
Believe it or not, outsourcing this aspect of your business can be tax deducted. If you record your payments to professionals like these and report them annually, then you can claim tax back on this part of the business.
- Marketing and Advertising
Whether you refer to it as promoting or marketing, this is another part of your business that you can deduct expenses from.
Bringing in new clientele is essential for the vitality of your business. Therefore, it’s undoubtedly tax deductible. Just remember, however, that it’s the cost of the ad itself that’s deductible – not the labor or travel involved.
- Software and Computer Hardware
Whenever you need to purchase reference materials that contribute to the production of your business, you can expense them. In fact, as long as items like these fall beneath $2500, you don’t have to depreciate them.
Additionally, if you’re using these devices for work purposes more than 50% of the time, then they may be expensed.
- Car Expenses
If you use the standard mileage rate, you can deduct your car as an expense of your business. If you prefer to do it as you use it, you can also deduct actual expenses day by day as well.
It’s important to remember that the standard mileage rate changes every year, so be sure to keep on top of this if you’re going to record your car as an expense.
- Insurance
If you’ve thought ahead to unpredictable situations that may fall on your business, then you’ve most likely already got business insurance. This is a great way to protect your capital and assets if anything goes awry.
While it may seem like a painful weekly payment, you can get some of it back by expensing it at the end of the fiscal year.
- Professional and Legal Fees
Just like when you deducted the expense of your accountant, you can also expense any legal fees you’ve had to pay. This also includes appraisers, business advisors, and attorneys.
Deducting Expenses in a Small Business
While your business may be small, what you can deduct from your tax is not. As you can see, there’s a broad range of business expenses that can be deducted at the end of the year so you can fall well within your budget.
