Understanding and taking advantage of your tax write-off as a small business is crucial. However, more often than not, we hear from tax preparers that many business owners are not taking full advantage of their tax deductions. So we asked them for some money-saving tax write-offs your need to know about!
Money Saving Tax Write-Offs You Need To Know
So why is this important? Well, when you don’t capitalize on the deduction available you are leaving money on the table. Use this small business tax write-off checklist with the advice of your tax preparer to ensure you are making the most of your small business write-offs.
To Deduct or Not to Deduct That is the Question
Getting the most out of your tax deductions depend on careful attention to rules concerning what is and is not deductible. Keep in mind that every small business is different and what you can write off does vary based on your structure and products/services. The only way to completely ensure tax write off accuracy is to consult a tax professional before filing!
Commonly Overlooked Small Business Tax Write-Offs
Here are the three most frequently overlooked tax write-offs!
As a small business owner, you either use your personal car for business, or you use the company vehicle. Either way, you can deduct some of the costs of keeping it on the road.
There are two methods to calculate vehicles deductions:
Standard Mileage Rate
- Deduct a certain amount for each mile driven, business-related tolls and parking fees.
- Keep track of all your actual business-related expenses to make deductions.
Track your total business auto expenses so you can calculate the maximum tax write off on your tax return. You can use whichever method results in a larger small business deduction.
As a small business owner, you understand the value of education and staying current with the latest technology. You can deduct educational expenses if they are directly related to your existing business. So, unless you are a professional artist that sculpting class you wanted to attend is not deductible.
Types of Deductible Educational Expenses:
- Online Courses
- Books, eBooks, and Audiobooks
- In-Person Training and Workshops
- Reference Materials
Home Office Expenses
Do you have a particular place in your house set up for the sole purpose of conducting business? Do you use it on a regular basis? If you answered yes to both questions, then you can write off a portion of your bills associated with your home.
To calculate your deductions measure your work area and divide by the square footage of your home. The result will be the percentage of rent or mortgage, electricity, housekeeping, or insurance you can claim.
Warning!! A Few Words to Wise:
Be sure your home office is dedicated to your work! Do not attempt to claim your living room or dining area because you work on your laptop there. If you make a false claim, you will be in a whole heap of trouble if the auditor ever comes knocking.
Getting Your Money’s Worth
Here at PayWow we understand the complexity of processing payroll and trying to manage the day to day business. This is failing to mention the ever-changing political and tax policy scene. Which is why we strive to simplify your payroll need with our innovative payroll software solution. Utilize our informative payroll blogs to read the latest small business news and information.
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