Frequently Overlooked Tax Deductions for Small Businesses
One of the most important things to any small business owner is tax deductions. Anywhere you can deduct against your profits means tax savings for you. Sure, you know you can deduct your office supplies and mileage when driving your own car, but did you also know that you could deduct what it cost you to put the latest and greatest operating system on your and your staff’s computers? Make sure you take advantage of every tax perk the IRS is willing to hand out. Your bottom line will thank you for it.
If you work out of a home office, you can deduct the space on your tax return, and you should, despite the misconception that you’ll be more prone to an audit at a later date. This simply isn’t true, and if you aren’t deducting the square footage and its related percentage of your rent or mortgage payment, insurance policy, and utility bills, you’re missing out on quite a deduction. The space must be dedicated to business only, so if it is, put it on your return.
Software and Subscriptions
It doesn’t matter what business you’re in these days, you use a computer, and your employees use computers, and you need to keep them up to date with the latest software to protect your investment and keep your operations running smoothly. Believe it or not, you can deduct the costs of your business software alongside any subscriptions to magazines and periodicals that are related to your operations. These tax deductions are some of the most overlooked, so don’t miss out on them.
Office furniture yes, but equipment too? Yes. If you use your computer primarily for business, you can deduct it. You can also account for your handy-dandy printer-copier-scanner machine and that old dinosaur, your fax machine. The equipment you use to run your business is a business expense; just make sure it’s used for business only. The IRS will not find favor upon your deduction of the family PC that you have to kick your teenager off daily when you “go to work.”
Other overlooked tax deductions include the money you put into your insurance premiums, retirement contributions, and medical insurance. It’s important to ensure that you receive as many deductions as you can each year when it’s time to file your business taxes. If you don’t, you are likely paying more taxes than you should. This might be good for Uncle Sam, but it sure isn’t good for your business, which will only grow with the extra money you save on your federal return.