CPA Recommended Tax Deductions for Small Businesses
When you run a small business, a CPA can be a huge help. A CPA can help you be aware of the many tax deductions. This will help you keep more of the money you make. Here are some of the deductions that you can take on your tax return if they apply to you. Just be sure that all the deductions you make are legal – the last thing you want is to get in trouble with the IRS.
Capital Expenses
Starting your business can be extremely expensive. For the first year that you are in business, you can deduct up to $5,000 of the cost of getting started. This includes any business-related expenses that you made before your business was actually founded, like office supplies and advertising. If you spent more than $5,000 that first year, you can deduct the rest in equal increments over the next 15 years of business.
Office Supplies and Furniture
This is one of the easiest tax deductions to make for most small businesses, but many people forget to keep track of their expenses until it is too late. Make sure to keep a note of any office supplies or furniture that you purchase throughout the year so that you can deduct them. You can even make these deductions if you are an entrepreneur working from home, as a personal office is an essential that is not cheap to set up.
Entertaining Expenses
As a business owner, there will be times when you need to entertain prospective clients or customers in order to win their business. You can deduct these expenses on your taxes. This includes anything from taking your clients out to dinner, to throwing events for potential customers.
Auto Expenses
If you pay for a your company car, you can actually deduct it on your tax return. This includes everything from the cost of the car itself to the gas, maintenance, and insurance premiums. There are two ways to deduct your auto expenses from your taxes. The first is to keep track of every single expense for your car over the course of the year. This can be time consuming, you can also calculate your standard mileage rate at the IRS website. This is where you keep track of every mile driven, and you deduct a certain amount based on that.
Travel Expenses
If you and your employees take trips for your business, then you can deduct any travel-related expenses on your return. This includes the cost of flights, the cost of a rental car, the cost of lodging, and the cost of food or per diem while you are out of town.
Software
Since most companies manage their operations with computers nowadays, you can deduct the cost of new software on your tax return. However, it must be depreciated over a period of three years, so be sure to take that into account when making your deductions.
Moving Expenses
If you are moving to a new office or expanding your current property, you’ll find that there are many different expenses to take care of, and they can get expensive. Luckily, you can actually deduct these from your tax return. You can also deduct some moving expenses from your personal tax return.
Phone Charges
You can deduct your company phones on your tax return, whether they be cell phones for your employees or landlines for your office. After all, you need a phone to communicate with your clients!
Advertising and Promotion
Most small business owners are aware of the fact that they can deduct traditional advertising expenses like web, TV, or radio ads on their tax return. But did you know that you can deduct anything related to promotion on your return? That means that you can deduct promoting your business at events, or sponsoring a local school, sports team, road, or something else. Go ahead and keep promoting your business – it will pay off in more ways than you had originally thought.
New Equipment
Sometimes your office equipment just really needs an upgrade. Luckily, you can deduct new equipment on your tax return. However, there are some regulations regarding how much you can deduct and when you can deduct it. Like software, some equipment will need to depreciate over time instead of deducting all at once. Research the regulations for your specific type of business and equipment before making a deduction to prevent problems.
Charitable Contributions
Your business can deduct any charitable contributions you make on the company’s tax return. Your CPA can explain this in more detail. Certain types of businesses can allow you to deduct these charitable contributions from your personal tax return as well. This is great motivation to donate to charities around you and get involved in your community.
Insurance, Retirement, and Social Security Contributions
If you are a small business owner who pays for their own insurance premiums, contributes to their own retirement account, and makes their own social security tax contributions, you can deduct all of these things on your tax return to save you money. This is because these are expenses that your employer would typically cover for you.
It is important to make as many legitimate deductions as you can as a small business. You’ll be able to get the resources you need to promote your company, without worrying about what they will cost. Throughout the year, you should keep track of all expenses that you can deduct on your return. Be sure to check with your CPA before filing to make sure that all deductions are legal.
Contact Abbo Tax CPA for more information.
