As a businessman, you are probably aware of the many deductions you may have when you file your tax return. You can deduct almost anything you buy for the company as long as it is necessary for the company. The cost must also be sensible. The deductions can really add up for small businesses and help save some on your bottom line. Think of it like this: your company falls within the 25% range and you buy a $ 2,000 computer. You can save $ 500 in a tax deduction insofar as your computer is used for business. You are not eligible to claim a personal expense deduction. Some of the most common deductions are: office costs: the maintenance of a company office can lead to significant deductions. You can deduct rents and utilities and you can deduct a portion of your monthly rent if you do not own your home if you work from home. Make sure your home office meets all the requirements in order to deduct them.
Travel expenses: business travel may be deducted as long as the journey is carried out. You can deduct airfare, accommodation and other costs. Meals you eat during business are deductible at 50 percent. If you organize your trip properly, you can even deduct half-business and half-personal costs for a trip. Transport: car and truck deductions are the most common deduction for companies. You can deduct all your business driving, except the drive to and from your home to your workplace. You can specify your costs or opt for a standard deduction of 0.545/mile. The standard deduction only requires you to track your kilometers instead of the costs of gas and repair. Meals / entertainment: In the past, companies could spend many outings. However, the IRS recently stopped these deductions unless you have a genuinely legitimate business reason to attend the event. You also need to have a thorough business discussion before, during or immediately after the event. Depreciation: Some property, such as cars, furniture and computers, is subject to depreciation and you can claim the cost gradually.
Thanks to the IRS code section 179, you are not always required to depreciate. This enables small companies to deduct the entire cost of the property and create a greater deduction at once. Supplies: If you purchase items you need to keep your company active, you can deduct them. There are also simple supply costs, such as rubber bands and paper clips, so keep these receipts. Legal costs: Probably at some point in the tax year you used professional legal services. If you had paid for these services, you can deduct the costs as long as they deal directly with the business. Insurance: property and liability insurance can be deducted if the policy applies to the business. You may be entitled to deduct part of your homeowner’s insurance if you work from a home office. Self – employed persons may also deduct health insurance expenses.