As a professional, you are probably aware of the many deductions you may be entitled to when you file your tax return. Almost anything you buy for the company can be deducted if it is necessary for the company. The cost must also be reasonable. The deductions can really add up for small businesses and help save some on your bottom line. Think about it this way: Your business falls into a 25 percent bracket and you buy a computer for $1,000. If the computer is used for business purposes, you can save $250 in a tax deduction. You are not eligible to claim a personal deduction.
Some of the most common deductions are: Office costs: Keeping a company office can lead to serious deductions. Rent and utilities can be deducted, and if you work from home, you can deduct a portion of your monthly rent if you don’t own your home. Make sure your home office meets all the requirements to deduct them. Travel expenses: Travel in connection with business can be deducted as long as the trip is spent on business. You can deduct airfare, accommodation and other costs. Meals you take during your business are deductible by 50 percent. If you organize your trip properly, you can even deduct costs on a half-business and half-personal trip. Transport: The most common deduction for companies is deductions for cars and trucks. All driving you do for business purposes can be deducted, with the exception of driving from your home to your workplace. You can either split your expenses or choose a standard deduction of 0.54.5 / mile. Instead of gas and repair costs, the standard deduction only requires you to track your miles. Meals / entertainment: In the past, companies could write off many outings as a cost. However, the IRS recently ended these deductions unless you have a genuine legitimate business reason to attend the event. Before, during or immediately after the event, you must have an in-depth business conversation. Depreciation: Some properties, such as cars, furniture and computers, are subject to depreciation and you can gradually claim the cost over time. Thanks to the IRS Code Section 179, you don’t always have to depreciate. This allows small companies to deduct the entire property cost and at the same time create a larger deduction. Supplies: If you purchase items to keep your company operating, you can deduct them. Simple supply costs, such as rubber bands and paper clips, also count. Legal costs: At some point during the tax year, you probably used professional legal services. If you paid for these services, you can deduct the cost as long as it deals directly with the company. Insurance: If the policies apply to the company, liability and property insurance can be deducted. You may be eligible to deduct part of your homeowner’s insurance if you work from your home office. Individuals who are self-employed can also deduct health insurance costs.
