It’s that time of year again—tax season. Small business owners have enough on their plates without worrying about filing taxes, but unfortunately, it can’t be avoided. Fortunately, various creative tax deductions available to small business owners can help reduce your taxable income. Here are seven of the most common and creative tax deductions that businesses should consider taking advantage of this year.
- Home Office Deduction: Depending on the requirements in your area, you can deduct some or all your home office expenses from your taxes. This includes rent, mortgage interest, internet, phone bills, and even utilities if you use them exclusively for work purposes. You'll need to keep detailed records and receipts, so it's essential to be organized when tracking these expenses.
- Vehicle Expenses: If you use your car for business travel, you can deduct a portion of the costs associated with owning and operating it from your taxes. This includes gas, maintenance, insurance payments, and depreciation, if applicable. Be sure to keep track of how many miles you drive for business purposes so that you can accurately calculate how much you can deduct at the end of the year.
- Business Meals & Entertainment: If you take clients out for meals or entertainment throughout the year, those expenses may qualify as tax-deductible business expenses depending on specific criteria being met. In general, meals must have been taken while conducting legitimate business activities to qualify as deductible expenses—so ensure they're adequately documented!
- Advertising & Promotion: Any money spent on advertising materials such as flyers or brochures (or anything related to promoting your brand) is deductible from your taxes if they were used exclusively for business purposes and not personal ones. Keep track of any promotional materials purchased throughout the year to take advantage of all potential deductions come tax season!
- Insurance Premiums: The cost of any insurance premiums paid throughout the year (such as health insurance or liability insurance) is eligible for deduction from your taxes, provided they were used exclusively for business purposes and not personal ones. Ensure these premiums are tracked carefully so they are noticed come tax time!
- Education Costs: Certain educational costs associated with running a successful business—including courses taken at universities or online learning platforms—are eligible for deduction from your taxes provided they meet specific criteria established by IRS regulations (e.g.., course material must directly relate to running a successful business). Be sure to save all receipts related to education costs to maximize potential savings come tax season!
- Charitable Contributions: Donations made throughout the year towards charitable organizations or causes are generally eligible for deduction from your taxes provided they meet specific criteria established by IRS regulations (e.g., donations must be made directly from an individual or entity than through a third party). Keep track of any donations made throughout the year so that you don’t miss out on potential deductions come April 15th!
Keeping up with all these different taxation rules and regulations can seem daunting at first glance. Still, once you get into it, there is much more flexibility than most people realize when claiming creative tax deductions specific to running a small business efficiently and legally within local laws & regulations regarding taxation policy & procedure. If proper records are kept and receipts saved, companies should have no problem claiming all their eligible deductions this upcoming tax season!