As a small business owner, you know that every little bit counts come tax time. Any deduction that you can take to ease the burden can help to keep your business on track the rest of the year. Common suggestions for deductions include home office space, office supplies and vehicle expenses, but there are many other things that you could be keeping track of to maximize your tax deductions.
Make the Most of Startup Costs
The costs associated with getting a business up and running add up fast. You may have to research the market, develop products or services, set up a retail location, train employees, connect with suppliers or hire consultants. If this is the year that you incurred all of these expenses, you can deduct up for $5,000 worth of startup expenses and the same amount from organizational costs on your return.
Never Miss a Receipt
Many business owners only consider “big” purchases when thinking about tax breaks, but just about everything you buy or use for business purposes can count as a deduction. That means if you run to the local office supply store for printer ink or fill up your gas tank for a trip to meet with a client, you could be missing out on money back unless you keep the receipts. Create a dedicated file for purchases, and save every single receipt that has anything to do with business operations.
Stay Healthy
If you run a business that has less that ten full-time employees and offer them health insurance, use form 8941 to determine your eligibility for a health care tax credit. The amount you get depends on the average wages of your employees. Companies who pay out less than $50,000 a year per person in wages tend to get the most benefit from this credit.
Understand Section 179
Many equipment purchases have to be depreciated over a period of time, but there are some that fall under Section 179, a provision that allows you to deduct up to $500,000 worth of “eligible business property” in the year that you began using it. This includes:- Equipment used for manufacturing or production
- New vehicles and company transportation costs
- Business or farm facilities
- Technology equipment
- Off-the-shelf computer software
Being able to take such a substantial deduction can be a big help in offsetting high costs and can allow you to maintain a balanced budget.
Travel Smart
All business-related travel expenses can be claimed as tax deductions. Keep track of airfare, hotel fees, car rental costs, miles traveled and any other associated payments. Food bills, including meals shared with clients, are deductible up to 50 percent. If you attend a relevant conference, the entire cost is also deductible. However, personal entertainment doesn’t count, so if you spend an afternoon on the golf course or head to a local hotspot for a show in the evening, separate those expenses from the rest of the trip when doing your taxes.
Donate Stocks Instead of Money
Appreciable stocks are a better choice when making charitable donations than simply writing a one-time check. If you donate a stock that starts out at low price per share and increases in value by the time you’re ready to do your taxes, you’re allowed to deduct the current value of the stock rather than the original price. Stocks that do particularly well provide big returns to you and to the charities that receive your donations.
Get Educated
Taking classes, attending seminars and even earning new degrees may all be deductible expenses. If the education you’re receiving is relevant to your industry and will improve the skills required to run your business, you can deduct tuition, books and even associated travel.
Look Sharp
Making repairs may seem like a mundane expense, but the IRS sees anything necessary to return your business location to its original state as an investment in the value of the property. Upgrades to improve the facilities may also be deducted, including costs associated with a shift toward more energy-efficient operations. In some cases, even lawn care and landscaping may qualify for deductions. Keep track of all special and routine maintenance costs to get the most back on your return.
These little-known tips can help you hold on to more money at tax time, allowing you to invest more in your business and foster continued growth. Talk to your tax preparer about including these deductions and to discover any other potential options you may have.
