Eight Missed Deductions To Reduce Your Business Tax Bill

Eight Missed Deductions To Reduce Your Business Tax Bill

Are you deducting these 8 expenses that are guaranteed to reduce your tax bill and increase your business bank account?

Business tax deductions directly impact how much you pay in taxes however, year after year I see entrepreneurs that do not take full advantage of all tax deductions available. Over the years we identified 8 common deduction business owners don’t always know they can write off:

  1. Home Office Deduction

If you use an exclusive portion of your home as your primary place of business, you may be able to claim a Home Office Deduction. If you qualify you can decide whether to deduct actual expenses or use the simplified method. More information regarding the Home Office Deduction can be found at IRS Publication 587. Your Accountant can assist in making the best determination if you qualify for the Home Office Deduction and what method might be best for your individual situation.

  1. Startup Costs

If you just started a business, make sure to keep track of any costs incurred before you officially opened your doors. For example, if you incur expenses to research business markets and potential business opportunities, you might be able to deduct these expenses in the first year of business. In fact, you can deduct up to $ 5,000 of your startup costs in the first year of business, if your expenses exceed $ 5,000 you can amortize the difference over a 15-year period. There are limitations to consider, so discuss this with your trusted Accountant.

  1. Accounting and Professional Fees

Virtually all fees paid to your Accountant, Attorney and/or Business Consultant considered “ordinary and necessary business expenses” can be deducted. These include Tax Preparation Fees, licensing and regulatory fees.

  1. Business Drives

Taking the standard mileage deductions for business trips is an easy and effective way to write off your vehicle expenses. Good recordkeeping is essential in order to audit-proof your Business mileage deduction, consider looking at application like MileIQ that can help you automate the tedious process of tracking mileage.

  1. Cell Phone Bills

Often Business Owners use their personal Cell Phones for bona fide business calls to customers and clients yet, they don’t often think about allocating a portion of their Cell Phone Bill to their business. Identify the average percentage of business call you made during the month and allocate that percentage of cell phone costs to your business.

  1. Internet Costs

Internet costs are also overlooked quite frequently, if you work from home and use the internet to conduct bona fide business including answering emails, performing research or issuing invoices, then a portion of your Internet Cost should be allocated as a Business Expense. Consider working with your Accountant to identify the best way to quantify the percentage of Internet Costs that should be allocated to your business as a bona fide expense.

  1. Interest Payments

If you used your credit card to purchase business supplies and equipment, then the interest on your revolving credit balance is a deductible business expense. We always suggest segregating a credit card for business purposes to avoid co-mingling expenses between personal and business transactions. Ideally, you might want to consider establishing a business credit card strictly for business transactions, doing so will keep business expenses separate and build credit for your business.

  1. Health Insurance Premiums

If you are self-employed and paid Health Insurance Premiums for yourself, your spouse, and your dependents, you can deduct these costs directly on your Individual Income Tax Returns Form 1040 (not as a business expense). However, there are special rules and processes that must be implemented if you own more than 2 percent of your S corporation, therefore, consult with your Accountant for additional details.

With so many potential business tax deductions to track you might ask yourself:  Where do I begin? Complete the form on the right side and we will be happy to set up a FREE, no-obligation consultation to discuss how we can help you maximize your Business Deductions and keep more of what you earned.