VARIETIES OF TAX DEDUCTIONS YOU NEED TO KNOW
Not focusing on your taxes could cost you for sure—particularly in case you don’t know which small business tax deductions you’re qualified for. The exact opposite thing you need to do is miss out on deductions that could spare you hundreds or thousands of dollars on your taxes or, more regrettable, commit a few errors that leave you in hot water with the government.
Yet, don’t stress! We can assist you with improving your handle on what you can write off on your tax return.
So, here is the small business tax deductions for dummies:
You can deduct the premiums you pay for business insurance.
This may include:
- Property coverage for your furniture, hardware, and buildings
- Liability coverage
- Group health, dental and vision protection for employees
- Professional liability or malpractice coverage
- Laborers compensation coverage
- Collision protection for business vehicles
- Life insurance that covers workers, as long as the business or entrepreneur is certainly not a beneficiary on the policy
- Business interference protection that covers lost profits if your business is closed down because of fire or another reason.
Do you run some portion of your private venture out of your home, possibly doing the books in the nights after you’ve left your food truck for the evening? Or then again, maybe you maintain a completely home-based business. For some independently employed people and sole owners, it’s pretty normal to have a space at home that is dedicated to your work. The key here is the word dedicated. In some cases, accomplishing work at the kitchen table while your children get their homework done doesn’t count as a home office. You should have a particular room that is devoted to being your office with the end goal for it to be tax-deductible.
Figuring the size of your deduction is fundamentally identified with the measure of your house that is utilized as an office. For instance:
Complete area of your home/isolated area utilized as an office = the percentage of direct and indirect costs (rent, utilities, insurance, repairs, and so on) that can be deducted.
We strongly suggest that you read the government’s writing on this specific tax deduction, or potentially talk with a tax expert prior to filing taxes with this deduction. It’s one of the more complex ones accessible to entrepreneurs, and there have been various legal disputes and discussions throughout the years. When managing the potential for an exorbitant audit, it pays to be protected by counseling an expert tax preparer as opposed to being sorry.
A meal is a tax-deductible business expense when you are traveling for business or engaging a customer. The meal can’t be luxurious or lavish in light of the current situation and you can possibly deduct half of the meal’s actual expense in the event that you keep your receipts, or half of the standard meal allowance in the event that you track the time, spot, and business motivation behind your travel, but not your real meal receipts. The lunch you eat alone in your work area isn’t tax-deductible.
Advertising and Marketing
In the event that you’ve been passing out more business cards to possible customers than candy to trick-or-treaters on Halloween, you’re in luck! You’ll have the option to deduct the expense of printing those business cards on your tax return. Basically, anything you use to advance your business and get new clients (from social media promotions to bulletins) is 100% deductible. Thus, deduct away!
Tax deductions are a basic method to limit the measure of tax you need to pay, and great record keeping will guarantee you will keep those deductions if the IRS actually comes knocking.