Six Business Tax Deductions for Business Owners to Save on Taxes

For many business owners, paying taxes is a very touchy subject that many would rather not discuss or even think about. The simple reason is that tax planning is complex, which causes a lot of business owners to procrastinate doing their taxes to that one time of the year where they call their accountant to manage their taxes. For those who are guilty of doing this, this is a mistake because taxes are such a large expense in your small business and you really cannot afford not to take it seriously as it can cause your business to collapse. As most businesses have to pay taxes on profit as opposed to revenue, here are six business tax deductions that will allow you to protect the profit earned by your business.

• Home office tax deduction. The Home Office tax deduction is available for those business owners who run their business from specific areas of their home. The IRS is very particular about this deduction that they have set ground rules that people must follow. One of those is your business area must be separate from other areas of your home. It cannot be in the living room where family members use regularly. It has to be located in an area where you meet clients, create reports, send e-mails, and all other official work-related tasks. To utilize this tax deduction, calculate the square footage of your office as well as the square footage of your home. You also need to take account of directly related expenses such as office utilities, phone/fax lines, and computers among others. Give these to your tax preparer as proof of your home office.  

• Salaries and wages tax deduction. For those who are running a business with employees, the Salaries and Wages tax deduction is applicable. This deduction allows business owners to claim a tax deduction for the salaries, wages, bonuses, and other compensations paid to employees. 

• Insurance tax deduction. Another very useful tax deduction is the Insurance tax deduction. This deduction applies to business owners who pay for their health insurance. If you have sole proprietorship of your business, writing off your health insurance is very simple because it is 100% deductible. Regardless how you pay for your insurance, you may want to consider providing the person doing your book-keeping with all total premiums made during the year.

• Rent on business property tax deduction. The IRS considers rent as any amount that your business pays to use property that you do not have any ownership. Generally, rents are tax deductible. However, it’s only allowed if the rent is for the property used for your business. If you receive equity in or title rights to the same property, the rent will be inadmissible as a tax deduction.

• Car and truck expenses tax deduction. One of the most critical tax deductions for any business is the Car and Truck Expense tax deduction. Writing off your auto expenses requires you to regularly track the mileage of your vehicle/s as it helps determine the percentage of your actual and personal use. Tracking mileage is very tedious because you need to separate the usage of the vehicle for business and personal use. You must also take note of your auto insurance, fuel consumption, car repair, and maintenance among others. If your vehicle is strictly used for official business, this should be easier for you to write-off.

• Advertising tax deduction. To thrive in its respective industry, a business must advertise. However, you can only deduct the cost of an advertising cost if the expenses are necessary and relevant to your business. As most businesses advertise to reach more consumers, build brand image, and spread awareness, they need advertising outlets such as TV, radio, and most online advertising platforms available. The use of these outlets all cost money and are 100% deductible.

There are numerous more other tax deductions that will allow you to save money. The best way to learn more about these tax deductions is to find a tax preparer with considerable experienced. You need to reach out to these professionals if you want to avoid spending more on unnecessary taxes.