As a small business owner, you’ve got nothing to worry about. Revenue comes easy, expenses are minimal, and it is no problem at all to meet your tax requirements at the end of the year.
Okay, so that’s probably not how it works for you – or for any other small business owner.
Owning your own business is an incredibly rewarding experience, but it is not easy. You have to work hard for everything you earn, and you have to look for opportunities to save whenever possible. For a bit of help, we have created a list of a few small business tax deductions which you may find beneficial. If even just one of these deductions is able to reduce your overall tax liability, we will consider this article a success.
Of course, your eligibility for these deductions is going to depend on a number of factors, so review each carefully. You may need to speak with your accountant or tax preparer to confirm that your business is eligible for a given deduction. Let’s get on to the list!
#1 – Self-employed Health Insurance Deduction
To start off our list, we are talking about really small business – those who are self-employed. If you work for yourself as a freelancer or in some other capacity, you’ll likely wind up buying health insurance on your own. And if you do, it may be possible to deduct the premiums that you pay each month. Given the rising cost of health insurance, this is one of the biggest deductions you are likely to find.
There are a couple of basic qualifications to point out for this deduction. For one thing, you need to report a net profit for your business for the year. You also may not be able to claim this deduction if you are eligible for another health plan, such as one offered by an employer. If you do meet the necessary restrictions, however, taking this deduction can make a huge impact on your final taxable income for the year.
#2 – Business-Related Vehicle Expenses
If you have a vehicle for your business, many of the costs associated with owning and running that vehicle are likely to be deductible. This will be simple of the vehicle is used for business only, and a little more complicated if you use it for both personal and professional purposes. Either way, there are savings to be found here, as long as you are willing to keep accurate records. To keep things simple, you may wish to use the standard mileage rate deduction, rather than tracking actual costs all year long.
#3 – Work Opportunity Tax Credit
For businesses which hire employees, there are potential tax savings to be found by hiring certain individuals. The Work Opportunity Tax Credit gives you the chance to enjoy a tax benefit while also helping someone who may otherwise have difficulty finding employment. Military veterans are commonly included in this category as a way to help them get back to work after serving the country.
#4 – Remember Your Home Office
It is extremely common to work from home these days, as technology has made the transition from a work office to a home office virtually seamless. If you do work from home, and you have a dedicated space in which to do so, the cost of that space may be deductible. There are a few different standards that must be met in order to claim this one, so read the rules carefully. You probably aren’t going to take a huge bite out of your tax bill with a home office deduction, but every little bit helps.
#5 – Bank Fees
This just may be one of the most-commonly overlooked small business tax breaks. When you have to pay a fee for a banking transaction – whether it is the use of an ATM or some other charge – there is a good chance that the fee will be deductible. These fees usually seem insignificant at the time, but depending on your financial business practices, they may add up to a worthwhile deduction by the time the year is out. Good record keeping is important here, of course, to make sure you don’t have to go back and track down all these little fees for the past 12 months.
