Most business owners don’t mind paying their fair share of taxes, but few want to pay more than they really owe. Make sure you don’t overlook these eleven often-overlooked small business tax deductions.
Consult a Tax Pro.. and Make Sure You Don’t Miss These 11 Small Business Tax Deductions Before Filing
It’s an understatement to say that the tax code is complex. It is fairly common to overlook one or more tax deductions that could save your small business money, so we came up with a list of eleven tax deductions that small business owners sometimes miss.
11 Often-Missed Small Business Tax Deductions
Some of the tax deductions that are often missed by small business owners include:
1. Home office space, which the IRS defines as space dedicated solely for business use. In addition, utilities associated with this space may also be deductible.
2. Office supplies, equipment and furniture are all tax-deductible. Pens, paper, paperclips and sundries – all those small items purchased throughout the year could add up to a great big tax deduction. Make sure you collect receipts throughout the year so that you can identify and claim deductions for all your miscellaneous expenses.
3. Mileage, parking fees and tolls may all be tax deductible (or a percentage may be tax deductible). If you use your personal automobile for business, make sure that you keep a log of all of your business-related mileage, tolls, parking fees and other expenses.
4. Subscriptions. When you think “subscriptions” you might think magazines and newspapers; however, in the digital age, this could also apply to software and cloud-based application subscriptions used in your business.
5. Education and training costs. The cost (including the cost of related travel and meals) of continuing education may be tax deductible if the training applies to your current business or line of work and is a requirement for keeping your license or to maintain or improve skills required for your trade or business.
6. Health insurance and other insurance premiums. As a small business owner, your own health premiums might be tax deductible or the premiums that your business pays (or contributes) for its employees. In light of Obama’s recent major health insurance overhaul, the best idea is to consult an insurance specialist and/or a tax specialist who is well-versed in the new regulations for advice.
7. Startup costs. Many small business startup costs (such as advertising, launch-related expenses, market surveys, training for employees, consultant fees, transportation, etc.) are tax-deductible. If they exceed a certain dollar amount, you will have to amortize them over a period of time; otherwise, they should be deductible in the first year.
8. Cell phones. Many business utilities fall under the heading of tax-deductible. Generally, only cell phones used exclusively for business purposes are tax deductible, though you may want to get a professional tax preparer’s opinion as to whether a portion of your personal cell phone expenses may be tax deductible as well.
When looking at telecom bills, don’t forget expenses such as land lines, fax lines, internet, wi-fi and similar communications and data-related costs.
9. Legal expenses, including tax preparation costs. There are many times when a small business owner may wish to consult a business lawyer or utilize the services of paralegals, notaries and other expert services. Some of these costs may be tax deductible, as could all (or a portion) of the fees paid to a tax preparer.
10. Interest. Interest (or a portion of the interest) paid on business loans may be tax deductible, even if a loan is used for both business and personal purposes.
11. Retirement contributions. Retirement plans or money contributed toward employee retirement programs may be tax deductible. Be sure that you check with your financial planner as well as your tax preparation expert to determine whether your retirement contributions are tax deductible, or how you can set up or modify your retirement plan to take advantage of related tax deductions.
From the obscure to simply overlooked, small business owners often fail to identify and claim all of the deductions they are entitled to use. To make sure you don’t overpay your small business taxes this year, be sure to have a tax professional look over your return before you send it in.
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