If you own a small business, you probably do just about everything you can to save money. But did you know there are several small business tax deductions you can take advantage of?
Thinking carefully about your tax deductions will help you keep more of your revenue. Plus, it’ll help you save more money for growing your business.
Here’s a guide featuring small business tax deductions you need to know. Keep reading to learn more!
Business Use of Vehicles
Small businesses receive significant tax deductions for business use of a vehicle. These deductions can include the taxes placed used for business transactions that include:
The total mileage on the vehicle is also calculated at the standard year’s rate of 54 cents per mile traveled. Additionally, the total repair costs and vehicle depreciation can be deducted with the help of a qualified tax specialist.
Being aware of such deductions can help small business owners save valuable resources such as time and money.
Tax services from companies like https://www.nav.com/business-taxes/ can help small business owners find deductions, so they don’t pay more than necessary come tax time.
Home Office Expenses
Home office expenses are certainly a type of small business tax deduction that business owners should be aware of when filing their taxes. The IRS allows self-employed individuals to deduct expenses associated with their home office to give them a tax break.
These include items such as mortgage interest, insurance, utilities, repairs, and even a part of the rent associated with the home. By claiming these deductions, business owners can reduce their taxable income, meaning they will owe fewer taxes.
Employers can deduct wages they pay employees, including some bonuses and fringe benefits, as well as the costs of employment-related health insurance and other benefits.
Business owners should also be aware of deductions related to employee work travel expenses, training, and other related expenses. Employee-related expenses represent a large percentage of a small business’s budget and make up a valuable tax deduction category that can help business owners save on taxes.
Health insurance is one of the most significant small business tax deductions for any business owner to consider. Any individual premiums or employer-provided health care coverage, both for the proprietor and their employees, can be deducted from taxes.
Additionally, any costs related to such coverage, such as medical supplies or even medical expenses incurred as a result of health problems, can also be deducted.
Generally, contributions to qualified tax-exempt organizations are deductible in the same year they are made. Contributions to political campaigns are not deductible. Additionally, a business can deduct the portion of a payment that is contributed to charity.
For example, if there is a service fee associated with a charity event, the portion of the fee that is contributed to the charity can be deducted. Some contributions may need to be itemized, such as noncash contributions, depending on their value.
The value of volunteer work done for an organization is not deductible. All deductions, whether cash or noncash, need to be properly documented, including the date and the amount of the contribution.
Learn All About Small Business Tax Deductions
Overall, it pays to know these small business tax deductions and to be able to – and comply with – the correct paperwork. It can save business owners a significant amount of money.
Now that you know what you need to know about small business tax deductions, track expenses and maximize deductions.
Did you find this article helpful? Check out the rest of our blog.