As a company owner, you have to file annual taxes. There’s no way around it. But there are ways to minimize the pain by subtracting certain costs from your business income tax. Many small business tax deductions go overlooked, thus leaving large sums of money on the table each year. We are here to make sure you cover your bases, report all relevant deductions and get back every penny you deserve.
Company Car/Truck Expenses
Oil changes and gas purchases are completely deductible if you use the vehicle(s) for work-related travels. You can use the established standard mileage rate or a record of actual car expenses. It is important to note that daily commuting travel, most often, is not eligible for deduction.
Supply Spend Tracking
The next time you head out to Target, OfficeMax or any other office supply outlet, make sure you hang on to your receipts. These costs are completely deductible – with correct documentation. Items that can be written-off include printer ink, cleaning supplies, paper and even furniture.
Ordinary Advertising Costs
Promotional costs and advertising budgets are completely deductible, as they are seen as a true cost of doing business by the IRS. All the more reason to reach out to a larger audience!
While business entertainment costs cannot be deducted, the actual travel costs can be. These include airfare, lodging, boarder tolls and more for you or your team members who are traveling on behalf of your small business.
Accounting & Legal Fees
Have you hired an outsourced business accountant to help keep your numbers in order? Have you occurred any legal fees over the past year? Both of these can be fully deducted. Legal fees are considered if they meet the following criteria:
- They are related to either keeping your job or doing your job
- They are related to hiring a legal professional for financial advice during a legal dispute
Are you paying a mortgage on a property that isn’t considered your personal residence? You can fully deduct mortgage interest. And there is no limit on the loan size from which interest is claimed.
Employee Benefit Programs
You can get rewarded for rewarding your employees. Dependent care assistance, work-specific smartphones, tuition forgiveness, further education and other employee benefit programs are deductible, along with contributions to some retirement plans.
Tax credits, rebates and other deductions are available for small businesses that pursue energy efficient strategies and alternative energies. Government agencies and utility centers will reward you for actively conserving energy. Take a look at what rebates are available in your state.
Business Debt Interest Deduction
Just as advertising costs are considered a “cost of doing business,” so is interest on loans that the business has taken out. However, “business interest” differs from “owner’s investment interest.” If an owner takes out a loan and invests all of the money back into the business, the debt is deductible. But if only some assets are considered “investments,” only some of the interest can be used.
Bank Fee Deductions
Those annoying charges for ATM withdrawals, checking accounts and other bank services are fully deductible. Make sure you’re getting back some of what they are taking.
These are just some of the most popular missed tax deductions. If you’re looking to dig deeper and save even more on your annual tax filings, contact Holbrook & Manter today.