Starting and running a successful small business isn’t cheap. Although cutting corners here and there helps to cut down on expenses, one of the best ways to save money annually is by taking full advantage of tax deductions for small businesses. Unfortunately, many business owners fail to compile a tax deductions list of tax deductible items, tax write offs, self employment tax deductions, and more. But that is about to change for you TODAY! Get ready to take a few notes.
You Need To Take Advantage of These Top Tax Deductions
1. HOME OFFICE
If you have a designated place within your home that you use on a regular basis for business purposes, a portion of your monthly bills [associated with your home] can be included in your tax write offs when you make your annual tax deductions list.
Calculation this deduction is easy and can be done in two quick steps. Simply measure your work area and divide by the square footage of your home. The result will be the percentage of rent or mortgage, electricity, housing keeping, or insurance you can claim.
Warning: Be sure your home office is dedicated to your work. Do not attempt to claim your living room or bedroom because you work on your laptop there. If you make a false claim, you will be in BIG TROUBLE if an auditor ever comes knocking on your door.
Staying educated and up-to-date plays a major role in becoming a successful small business owner. Did you know that education expenses can be included in your tax deductible items? Yep, you can even include it in self employment tax deductions if they are related to your current business. The types of education that are acceptable tax write offs include:
- Online Course
- Books, eBooks, and Audiobooks
- In-person training and Workshops
- Reference Materials
3. AUTO EXPENSES
This is one tax deduction we can all relate to. Most small business owners tend to use their car for business purposes or may have a company owned vehicle. Some of the costs that are accumulated to keep the vehicle on the road can be included on your tax deductions list.
There are two methods to calculate vehicle deductions:
- Standard Mileage Rate
- Deduct a certain amount for each mile driven, business-related tolls, and parking fees.
- Actual Expenses
- Keep track of all of your actual business-related expenses to make deductions.
Be sure to 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 deduction.
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