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15 Tax Deductions For A Small Business You Need To Know

Whether you're an established business owner or just in the beginning stages of running your business, saving every penny matters because IRS won’t follow up with you to ensure you didn’t miss any deductions on your tax return. That’s up to you (and your accountant or tax preparer).

Below, we list and explain important tax deductions you should remember.

1. Work Related Travel Expenses

If you’re frequently on the go, you should look into deducting your travel expenses. Types of deductible travel expenses include airfare, tolls, taxis, and lodging. You can reference the IRS website for a fully deductible business travel expenses list.

To qualify as work-related travel, your trip must meet the following conditions:

  • The trip must be necessary for your business.

  • The trip must take you away from your tax home, i.e., the city or area where your company conducts its business.

2. Business Property Rent

You can deduct your lease or rental payments from taxes if you rent your business property. Alternatively, if you run your business from home, you can also run an eligibility test with the IRS to see if you are entitled to any home office deductions. Types of deductible home business expenses include mortgage interest, insurance, utilities, repairs, and depreciation.

3. Start-up Expenses

If you launched a new business venture in the latest tax year, you could deduct as much as $5,000 in start-up expenses incurred in the lead-up to your business launch. That can include costs associated with marketing your new business, travel, and training costs.

4. Office Supplies

Paper, boxes, pens, staples… they may be small, but they all cost money (which you can deduct from your taxes).

5. Charitable Contributions

You can deduct charitable donations that you make to qualifying organizations. You can claim these expenses on your tax forms if your business is set up as a sole proprietorship, LLC, or partnership. You claim charitable donations on your corporate tax return if your company is a corporation.

6. Advertising and Promotion

You can fully deduct expenses related to promoting your business, including digital and print advertising, website design and maintenance, and the cost of printing business cards and billboards, as well as hiring a freelancer to design a business logo.

7. Software Subscription

This can be deducted if you’ve bought or downloaded software for your business. These types of expenses can be claimed under “Other Common Business Expenses>Other Miscellaneous Expenses” on your Schedule C tax form or your business expenses.

8. Medical Expenses

You can claim insurance premiums and medical expenses, including doctor’s fees, prescription drugs, and home care. If you’re self-employed and pay for your health insurance, you can deduct your health and dental insurance premiums.

9. Interest

If you have a small-business loan, you’ll make interest payments on what you’re borrowing from the lender. Those interest payments are usually fully tax deductible as long as the loan is used to cover business expenses. To claim this deduction, the business owner must be legally liable for the debt, and the business owner and the lender must have a “debtor/creditor” relationship.

10. Professional Service Fees

Any professional service fees necessary to your business’s functioning, such as legal, accounting, and bookkeeping services, are deductible for tax purposes. Using accounting or bookkeeping software for your business would also qualify as a tax deduction.

11. Utilities

Any utilities that you use for your business are fully deductible. This includes things like water, electricity, trash, and telephone bills.

12. Insurance

The cost of the business owner’s health insurance, business continuation insurance, and the business owner’s policy is all 100% deductible with the consideration of business entities. Other types of deductible insurance policies include property insurance, liability coverage, worker’s compensation costs, auto insurance, business-provided employee life insurance, and business interruption insurance.

13. Business Meals

As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business, and you need to keep the following documentation related to the meal:

  • Date and location of the meal

  • The business relationship of the person or people you dined with

  • The total cost of the meal

14. Investments

If you borrow money in order to make investments, you can write off the interest paid on loan. You can deduct the interest up to the point that it matches what you earned in investment income.

15. Education Expenses

You can deduct education expenses related to your current business, trade, or occupation.

Educational expenses that qualify for deductions include:

  • Courses and classes related to your field of work

  • Seminars and webinars

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