With tax season looming, you’re probably eager to find any way you can for your business to save money on taxes. Many items you use may be eligible for deductions. The trick is knowing which deductions apply and which ones don’t. Your CPA can advise you, of course, but the more prepared you can be in advance, the better. The savvy business owner misses no opportunity to deduct. Let’s take a look at some of the ways you can cut the amount you owe.
Oh So Many Deductions
Plenty of other tax deductions exist. The following list includes the most common. However, it covers only purchases. You can apply lots of other common deductions such as costs for phones, insurance, social security, retirement contributions, charitable contributions, and much more. We’ll cover some other suggestions in future posts!
Office supplies offer a truly simple deduction. If you saved your receipts, you have simple means to calculate the amount. With the frequency that most businesses buy such supplies, keeping a tally each month or each week may work best.
Did you purchase a new printer this year? Did your growth include new computers? Maybe you finally upgraded the printer. You can claim 100% of the amount you spent. The IRS website offers guidelines regarding how different kinds of businesses can apply these deductions.
Furniture gets pricey. Therefore, knowing that Uncle Sam will allow you to claim the cost of those items can offer considerable relief. The bigger your office, the more this one will come into play. Did you buy three new office chairs or three hundred? Deductions like this one might make you think twice about that coffee station your employees have mentioned.
If you run a business that keeps up with the rest of the world, then you use some type of software. Software helps you organize, records your activities, an can even manage some parts of your business for you. Thankfully, those purchases count as well and the IRS allows deduction for them.
You cannot approach the subject of software without including subscriptions. Many software companies have moved toward the subscription model and business owners have followed. Since software and subscriptions have merged, this deduction makes plenty of sense. For the creative tax filers, the challenge becomes finding what other types of subscriptions you use to run your business.
Vehicles and Mileage
Do you buy vehicles for yourself or others to operate your business? Does your weekly operation include regular driving? Those tax deductions offers a measure of relief to those that purchase more than a personal vehicle. If you compensate for employee mileage, you can write that in as well.
Travel, Meals, and Entertainment
The fact that the IRS allows for deductions for travel expenses is not news. The trick comes when you have to categorize your trip as business related or the meals you ate as business expenses. If your business trip to Orlando, Florida included a side excursion to Disney World, you will want to keep your receipts in very good order.
Debt from Purchases
Did you rack up some debt buying supplies and inventory? Did you incur the above expenses from a loan or a card? You can write that up as a deduction as well. Being able to write off those amounts should offer some welcome relief.
Payments to Contractors
Here’s where adding up your deductions might get fun. You surely used some contractors during the year. Did you hire someone to move your office? Did any renovations or remodeling occur? If you hire out your help via contractors you give 1099s, you can use this deduction. Oh, but best of all, you can also claim monies paid to lawyers and accountants. That’s right, the money you spent on accountants to do your taxes last year may be deductible this year!
Best Practice for Tax Deductions
The best practice for taking tax deductions on your purchases is knowing what you can deduct and what you cannot. On some items you can claim a 100% deduction, on others you cannot. It also helps to know which forms you will need to write up each type of deduction. Knowing what you can claim and filling out your taxes properly will gain you the greatest amount of allowable deductions.
The difficulty of tax preparation is no secret. If you want advice or wish to have your taxes prepared, feel free to contact us here at DCA.