Diving into business ownership is a costly affair. There is no way to sugarcoat that the first few years of running a small business will not be easy. No matter how much energy and time you have invested in your startup, there is no way of guaranteeing its success at the end of the day. Every year, approx 45,000 businesses get launched, and among them, only 33% could make it past two years.
Operating a small business or just starting up a business on your own can be very stressful. Amidst all the chaos, small business owners or startups often fail to keep up with the ins and outs of tax planning. Many reputable software programs, such as TurboTax Self-Employed, can make the task significantly easier, but hiring a CPA or accounting professional may be a good strategy also. For operating small businesses, claiming legitimate deductions will be the most useful strategy. The expenses you make should be necessary and ordinary items. It should solely mean it for business purposes and not for personal purposes.
Below, we will share a list of 7 tax deductions that will help your small businesses.
1. Startup costs
For your startup business, you will deduct a specific amount that will amount to combined startup and organization expenses of about $10,000. The overall deduction cost will include things like legal counsel, business-related travel, market research, advertising, employee training, and more. You may ask your small business CPA about which expense will be best to deduct as startup costs on your taxes.
As a small business owner, you must go through all insurance types, which are mandatory for the long-time plan for your business. This is extremely necessary if you intend to protect your assets, property, and employees. Your insurance costs are deductible in your yearly filings with the IRS, which involves owner’s policy, continuation insurance, and business malpractice.
Small business owners also have the option of claiming tax credits for health insurance. However, you need to make sure with your accountant if you are eligible or not. You may also check a few samples offered by case study assignment help services from where you can avail necessary guidance.
3. Transport expenses
Many small businesses or startups use vehicles like cars, vans, buses, and light trucks for various business affairs. If you have a proper record of the cars’ business usage, you will deduct the cost of operating the vehicles. Once this is set up, you will no longer have to keep a detailed record of the costs like oil and gasoline changed. However, you will still be required to keep a record of the miles and purposes.
4. Health insurance
As we all know, health insurance can be very expensive. On acquiring self-employment income, you will easily deduct the money used on health insurance for your spouse, yourself, and your dependents.
5. Costs of promoting your business
As you make people aware of your business, you will get a tax deduction that might come in the form of traditional advertising, networking, or even search engine optimization (SEO). Ensure you also consider expenses like graphic designs, website, and other costs that will incur with advertising your business.
6. Home office deductions
You must use your home office exclusively and regularly as a part of your business. It should be a principal place of your business. It will be a place where you meet or deal with your clients or customers. You will choose a designated room or area where you do business. When you conduct your business in the specific home office, you will be eligible to take home-office expenses. You will get a sense of relief as a percentage of the cost will get deducted for using the home office. These expenses include rent, internet access, electricity, homeowner’s insurance, mortgage interest, water, or repairs. If you need more information on this type of tax deduction, consider hiring online case study assignment help provider.
7. Food & Entertainment deduction
You might be thinking that there is no way IRS will let you deduct tax on your meals and entertainment activities. But in reality, you can actually avail yourself if it is directly linked to your business. They will deduct your cost if you are having a business meeting with a business client or partner at a restaurant. As a business expense, you will be eligible to deduct 50% off the total bill. From your part, you will have to keep records of all relevant receipts. Note down all the names of the parties attending the meal or taking part in entertainment activity. Also, keep a detailed account of the type of business discussed or performed.
As you prepare for your tax season, you will be able to take complete advantage of these deductions. You must explore all the potential tax deductions for your small business, which will eventually help with your business’s success.
Robert Smith is a digital educator, and academic counsellor working on behalf of a reputable firm. He is also a part of MyAssignmenthelp.com, where she offers marketing case study help services in various subject areas.