When you own a small business, tax deductions are crucial to avoiding the overpayment of taxes to IRS. Here are important expenses to track for reducing your tax bill.
Standard mileage rate. You may deduct mileage, parking fees and tolls for business use of your car. Most people take the standard mileage rate deduction because the recordkeeping requirements are less burdensome, but actual expenses often yield a larger deduction.
Tracking mileage. Keep track of the mileage, odometer start and finish for each trip, destination, the starting point, and business purpose.
Actual expense deduction. The “actual expenses” deduction, includes repairs, insurance, maintenance and depreciation for the business portion of your vehicle.
Overlooked fees. Professional and legal expenses, and association dues.
Monthly items. Professional publications and software subscriptions are a commonly missed item on small business tax returns.
Strange ways business advertises. This could include everything from cards, flyers, phone books, internet marketing, pay per clicks, features on sites, online listings, mailers, email marketing, door to door, phone marketing, stickers, conventions, booths, signs, and much more.
Watch out for the gift rule. Client gifts are deductible up to $25 per person. The only exception to this rule is if one of your workers has a life-changing event. This could include, promotion, death, marriage, hospital stay et. Then the gift can increase to $75.00 per person if it consists of fruit, flowers, or books.
It must be legitimate. If you have a home office that you exclusively use for your business, then deduct it. You can write off a portion of rent, utilities, insurance, taxes, maintenance, professional cleaning, depreciation, and interest.
Telephone and internet
Communication services. services specifically used for your business are deductible. If you use your home or personal cell phone for business, you may only deduct the portion used for business purposes.
Education and training
Advancing Your Skills. You may deduct the cost of continuing education, certification, and books to advance your level of skills for the business you’re already in. However, general education is not deductible in this category.
Interest on loans
Commonly missed. You can fully deduct interest on loans for your business,
Entertainment and travel expenses
Keep excellent records. If you want to deduct these expenses be sure to keep a log of who you met, why, where, when and for what business purpose. Only 50 percent of meals and entertainment costs are deductible unless traveling away from home.