Common tax deductions every small business owner should know
Running a small business is not easy, as you are always short of cash. Saving every penny in such harsh times is important in the long run. One of the best ways to save money in a small business is by knowing common tax deductions while filing taxes. Therefore, you need an experienced CPA in Port Jefferson Station, Long Island, for complete guidance. This article has jotted down five common tax deductions you must know about. Here we go!
Common tax deductions for small business owners
1. Business Expenses
Important business expenses spent for operating a small business are deductible. It majorly covers charges like:
- Rent for an office
- Utilities
- Purchases of office supplies and equipment
- Marketing and advertising expenses
- Professional fees.
To be able to deduct these costs from your taxes at tax time, you must maintain thorough records of these costs throughout the year.
2. Home office deductions
Running a small business in your home? You qualify for a home office deduction. You can write off costs associated with using your house for commercial purposes. These include:
- Percentage of your rent or mortgage
- Utilities
- Insurance
- Upkeep
The area must be utilized exclusively for commercial activities and fulfill additional standards specified by the IRS in order to be eligible.
3. Vehicle expenses
small business owners can deduct associated costs using the usual mileage rate or write off real costs. These include:
- Petrol
- Upkeep
- Insurance
- Depreciation
Maintaining precise records of all business-related mileage and expenses and the dates, locations, and reasons for each trip is critical.
4. Marketing and advertising
Advertising and marketing are important components of business expansion. Small business owners spend a significant amount of money on marketing and advertising. These expenses can be claimed. Some common examples include:
- Direct mail pieces
- Business cards
- Online advertisements
- Billboards
5. Retirement contributions
Contributions to retirement plans—like solo 401(k) plans, SIMPLE IRAs, and SEP-IRAs—are frequently deductible for small business owners. In addition to assisting with retirement savings, these contributions offer a significant tax credit that lowers their current taxable income.
Wrapping up
All these taxes are deductible for every small business owner. Thus, while filing taxes, they must keep in mind. Therefore, hiring a taxation lawyer who can take care of your taxes and deductibles is best.
