Paying taxes is an inevitable part of running a business. Unfortunately, if you operate a small business, the cost of taxes could cut into your bottom line. The good news is that your company may qualify for various tax deductions, which may help to significantly reduce the amount you must pay the IRS. The following are a few of the most common tax deductions you might claim when filing taxes for your business.
In many cases, getting a business off the ground may lead to financial hardship for a budding entrepreneur. It might surprise you to know that some of your start-up expenses may be deducted from your taxes. These are the costs incurred to create the business, as well as costs that may be involved in investigating a new business as a prospect. In fact, you may be able to deduct up to $5,000 in start-up expenses for your first year.
When You Work at Home
If you do some or all of your work at home, you may be able to use that to your advantage when filing taxes. Keep in mind, however, that the space must be used only for business. To figure out the tax deduction for your home office, you can simply multiply its square footage by $5.
Use of Your Vehicle
You could qualify for deductions if you make use of your personal vehicle for your business. To determine this deduction, you may apply one of two methods. You can calculate what you actually spent on expenses such as fuel, insurance, and repairs, or you may deduct a set amount for every mile your vehicle drives.
Another kind of expense that might be written off as a deduction is the cost of travel. These expenses must be necessary for your business, and they must be deemed an ordinary travel cost for your type of business. These costs might include auto rentals, airfare, meals, and hotel visits. In case you are ever audited, you should keep all of the receipts for such expenses. Keep in mind that personal travel costs, like any other personal expenses, are not tax deductible for your business.
Deducting Health Care Premiums
It’s important that you (or your tax preparer) are current on the most recent changes in health insurance mandates. You may be able to deduct your health care premiums, as well as those of your dependents, if you are self-employed. These tax rules are complex and may change based on health insurance laws. Thus, the best strategy is to consult a certified tax preparer if you plan to deduct health insurance costs.
As a rule, you should rely on a professional tax preparer to handle the taxes and tax deductions for your business. If you need financial help to cover business costs, deducting acceptable expenses is a viable strategy. You may also benefit from assistance from a reputable lender. Contact Fast Commercial Money for financing solutions today.