Tax season is difficult enough without adding the complication of trying to track every expense. But when you see the amount of deductions your small business may have accumulated, you’ll soon start accounting for almost everything you spend. Here are twenty ways to save that you may not have considered, for C-corps, S-corps, LLCs, partnerships, and sole proprietorships, (though some rules may vary).
1. Rent
If your business pays rent or a lease, that’s deductible. If you work from home you can check IRS Publication 587 for what you are entitled to. This can include mortgage interest, utilities, repairs, and insurance.
2. Utilities
Electricity, water, trash, phone, etc.; all of your utilities are deductible.
3. Office Supplies
Everything from pens, to tissues, to light bulbs are all office supplies and they are deductible.
4. Furniture
Office furniture is considered an office supply.
5. Software
Software can be claimed on the Schedule C tax form.
6. Auto
If you plan to deduct business related transportation expenses then it’s important to keep track of them, although the IRS does have a standard mileage rate that can be applied. Rules are different if your vehicle is solely for business purposes or split for personal use as well. See Publication 463 for details.
7. Travel
If you sometimes leave your company’s home city or your tax home to conduct business, for longer than a day, than those expenses is likely deductible.
8. Entertainment
Schmoozing a client or throwing an office party can all be deductible, but again, different rules apply so it’s important to save receipts along with the purpose of the event.
9. Marketing
Anything marketing related is deductible. Everything from online ads, to business cards, to the contracted graphic designer can all be credited.
10. Contract Workers
Hiring freelancers and independent contractors is deductible.
11. Wages
Salaries you pay regular employee, including commissions and bonuses, are deductible, unless your company structure does not include regular employees, as in sole proprietorship and partnerships.
12. Benefits
Certain employee benefits can qualify such as insurance, education assistance, dependent care, or retirement. On Form 1040, self-employed individuals may claim personal deductions for payments made into their own retirement fund.
13. Gifts
Gifts for your employees are deductible, to an extent.
14. Insurance
Many types of insurance are deductible like business insurance and the owner’s health insurance are fully deductible. Other write-offs can come from auto, liability, property insurance, as well as costs of worker’s comp. While small businesses may receive additional credits for employee health coverage.
15. Taxes
Ironically enough, the taxes you pay for the cost of doing business can be written off, in addition to employer taxes. This includes unemployment, FUTA, and, FICA, and can also include from federal to local income, or sales tax and property.
16. Money Owed
If your business loaned money that wasn’t returned, this can be claimed as “bad debt.”
17. Interest
If your business is paying down a loan taken from a traditional institution, the interest payments can be deducted.
18. Professional Fees
Legal and accounting fees for your business are deductible.
19. Startup Costs
Business expenses are discussed in Publication 535, but typically startup costs are viewed as capital expenses and considered investments. These deductions can happen over multiple years.
20. Inventory
If your business handles a physical product or keeps any kind of inventory, then the cost of the goods you sell is deductible. This can account for cost of raw materials, storage, factory overhead, and labor.
Knowing these entitlements are available, next tax season may start with a plan to track and organize much more of where your business is spending. Which, in the end, will keep you and your accountant smiling.
