Popular Small Business Tax Deductions in the US
Taxes. Never a popular subject, but one that all small business owners should be familiar with. Nobody wants to pay more tax than they have to. Luckily, small businesses can write off plenty of expenses as tax deductions.
Here’s our handy guide to some of the most popular tax deductions for your small business.
Advertising
You can expense any normal advertising costs for your business. So, if you’re running pay-per-click digital ads or taking out a page in a local newspaper, make sure you keep your receipts so that you can get a tax deduction.
Professional Fees
If you use the services of a professional like an accountant or attorney, those fees are tax deductible as long as they are necessary for your business to function. You can’t deduct any personal legal fees or fines such as parking fines that may be incurred while running your business.
Business Travel
Need to travel regularly for work, and/or take clients out for dinner? The good news is that you can claim all or part those expenses as tax deductible.
Business travel expenses like flight costs, hotel rooms, and rental cars are potentially tax deductible expenses if they meet certain criteria. Namely, if you’re traveling out of the city or area where you conduct your business and the trip is necessary to your business.
Business Entertainment
If you need to entertain your clients, you can deduct 50% of it as an expense, but you must discuss business during the meeting.
Car Usage
You can deduct all of the costs of operating and maintaining your car if it is used strictly for work. If you use your car for both work and personal, then you can deduct the costs of the business usage by claiming the mileage for business travel.
Equipment and Software
If you have purchased certain software or equipment, you can get a tax deduction for all or a portion of the costs. Items that can be deducted include laptops, tablets, and smartphones. For certain items over $2,500, you need to depreciation over several years. Your accountant can guide you toward using the correct depreciation schedule.
Any ‘off-the-shelf’ software that is used as part of income-producing business activity can also be deducted. Custom designed software or any software that isn’t available for general purchase doesn’t qualify. Databases and websites are also ineligible for the deduction.
Office Space
If you’re leasing office space for your business, you can claim the cost as a tax deduction. The same goes for the costs of running the office space, including office supplies, cleaning equipment, and utilities.
You can claim a tax deduction for any office space, including a desk or a private office in a co-working space like Office Evolution Hackensack. When you consider that it’s a tax-deductible expense, a co-working membership is even more attractive!
These are some of the most popular tax deductions for small businesses, but a good accountant will be able to help you identify all the tax deductions relevant to your business. You should always consult a tax advisor to confirm your entitlement to any deductions. Not all deductions will apply to every single business and it’s important to be aware of the rules surrounding them before you use them.
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