12 Things That are Tax Deductible for Small Businesses
Business owners are able to deduct several items from their taxes if it is an expense used for and by the business.
An item that lowers a business’s overall income will also reduce the amount of taxes they need to pay back making those expenses tax deductible.
Tax deductible also doesn’t mean that you won’t have to pay for any of the items listed, it just means that you will have a percentage of the cost of that item taken off of the total amount of taxes you owe.
The following items are the most common things small businesses can deduct from their taxes:
Inventory: Businesses who purchase products to either resell them or manufacture products to sell can deduct the cost of goods from their taxes.
Utilities: Utilities will vary depending on your location, but if you have a building for your business, you are able to deduct all utilities including water, trash, phone bills, and so on. If you work at your personal residence, then you will have to check with the IRS to see how much of your utility bill you can deduct.
Rent: Rent is similar to utilities where the amount that is deductible will depend on your location. Again, if you have a building for your business, you can include the total amount of rent as tax deductible. However, you will have to check your eligibility with the IRS to see if you can deduct anything from the rent at your personal residence.
Auto Expense: Any business that uses a car for business purposes can typically deduct anything that is considered an auto expense such as maintenance and gas.
Office Supplies: Supplies that you use for your business can also be deducted. This can include anything from pens and paper to office furniture and equipment.
Software Subscriptions: Most businesses will have a subscription to something they use for their business whether it’s virus protection for devices or bookkeeping software to track transactions going in and out of the business.
Advertising and Marketing: All marketing done for a business can be deductible. For instance, using paid ads on social media or printing flyers and business cards.
Travel Expenses: Travelling can be a huge part of some businesses, especially if you work with clients who aren’t local. Travelling includes more than just transportation, you can also deduct things like hotel expenses.
Business Entertainment: As a small business, you might host events for your clients or to promote your brand. If that’s the case, then all items used for the event including the expense of the location can be tax deductible.
Gifts: During birthdays or holidays, many businesses will send their clients gifts in appreciation. Those gifts are all tax deductible. Even taking a client out for lunch or dinner can be deducted.
Contracted Labor: If you outsource some of the responsibilities and tasks within your business, then you can deduct that labor. Anyone who does work outside of your company's employees that needs a separate contract will be considered tax deductible.
Legal Fees: Legal items can also be deducted. You might come across legal fees for many reasons including hiring someone to put together your contracts or in the case someone decides to take legal action against your company.
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