Getting To Know 6 Small Business Tax Deductions
Something I hear often from small business owners is that the cost of doing business can be a lot. Afterall, if you are the sole owner, you are the one paying all the expenses and managing operations. When it comes tax time, you want to make sure you are getting the most from your small business tax deductions. Here are six deductions that small business owners should always claim.
Professional Service Fees — These are the expenses incurred for your business to function. You can tax deduct any fees you pay for legal services, attorneys, accounting and bookkeeping. This also includes any accounting or software you use to run your business (e.g. QuickBooks and TurboTax) or inventory control software. Generally, you can deduct the software, but you can also deduct any fees that come with the product.
Business Insurance and Bank Fees — If you borrowed money for your business, you can tax deduct the interest payments on your loan. Generally, can also deduct interest on business credit cards, as well as annual fees on a business credit card.
Home Office Expense — Freelancers or small business owners that operate a home-based business can generally deduct the square footage of their home office. Be sure to check the IRS guidelines for the formula that determines how much you can deduct. Additionally, if you rent your home, you can deduct your renter’s insurance costs.
Utilities and Repairs — As a small business owner, you can tax deduct utility bills for your business. This may include electricity, phone, internet, water and sewage. You can generally tax deduct your phone expenses if you use a phone for business. Additionally, if you need to repair parts of your home business property to keep things running for your business, you can deduct those expenses as well.
Office Supplies and Marketing — Every business requires office supplies. Items such as printers, work-related software, paper, pens and envelopes can all be deducted. You can also deduct postage and shipping costs, as well as files and storage. Marketing costs, such as business cards, social media advertising, website hosting and domain addresses are fully tax deductible.
Auto Expenses — If you use your car for business, you can write off the expenses that accompany the vehicle. Typically, the IRS will have you report your mileage driven or gas expenses. Your tax preparer can determine which is the best deduction for your business. Generally, you can also write off car-related expenses, such as oil changes and repairs.
Owning a small business takes a lot of work and navigating the tax aspects can be tricky. You do not need to know everything yourself, especially when it comes to tax deductions. Consult a tax professional or experienced San Francisco tax attorney to help you make sure you get the most deductions for your small business.
Allison Soares is a partner and tax attorney at Vanst Law. Before starting her own practice, Soares was a partner at a tax law firm where she honed her skills handling a wide variety of tax and employment-related cases. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.