If you own a small business, you probably search for ways to reduce your expenses. However, if you don’t understand all the tax deductions you may be eligible for, you could be sending more money to the IRS every year than is necessary. Therefore, these are a few small business tax deductions you may be eligible to claim.
Interest and Fees
To run a legitimate business, you need a business bank account. Every fee you are charged at the bank is tax deductible. In addition, if you have business loans or credit cards, the interest on these financial tools is deductible. Any service or annual fees on your credit cards can also be taken off on your taxes.
Also, you can deduct any fees you are charged for professional services, such as legal or accounting.
Personal and Work Vehicle Expenses
If you use your personal vehicle for any type of work, even just running packages to the post office, you can take your mileage off on your taxes? Every mile you drive for business is worth up to $.56. However, if your vehicle is only used for work purposes, you can claim all your vehicle expenses, from insurance to maintenance.
Your Home Office
If you have an office or space in your home that you use exclusively for business, you may have some deductions you hadn’t thought about. For example, you can deduct up to five dollars per square foot of office space. You may also deduct a portion of your utility bills. This is typically based on the percentage of square footage you use for business.
In addition, your phone and internet can be deducted because you cannot run a business without them. If you use either of these tools for both business and personal use, you may only be able to deduct an amount equivalent to the percentage of time you use them for business.
Supplies and Equipment Expenses
Your supplies can vary widely from basic office supplies and raw materials to software and technology. Every penny you spend on supplies is tax deductible. In addition, furniture, equipment, vehicles and machinery can be depreciated over time, which can reduce your tax burden in future years when you are making more money.
Any children under 12 years of age and your adult dependents who cannot care for themselves typically need supervision and care while you are working. These costs can be written off during tax season.
As you prepare your taxes this year, search for all the small business tax deductions you may be eligible for.