Tax season is right around the corner, so it is time to get your finances together and get ready to file.
While you are getting prepared to file for the year, it can be helpful to start thinking about what tax deductions for small businesses you can take advantage of.
Here are the top 15 business tax write offs you can use in 2020.
- Rent: If you rent your office space, you can deduct those payments from your taxes. This can be a major expense, so make sure you don’t miss it.
- Insurance: Most businesses are required to have at least one form of insurance, if not more. You can deduct those premiums from your taxes.
- Advertising: Promotion and advertising expenses are deductible from your taxes. If you sent cards to clients, sponsored an event or paid someone to make you a new logo, you can deduct these expenses.
- Legal: Paying legal fees is a necessary part of running a small business and are deductible.
- Home Office: Just because you run your business from home doesn’t mean you can’t deduct the costs of running a business from there.
- Vehicle: A lot of small businesses live or die based on their ability to reach their customers, and generate revenue. You can deduct expenses that go toward you work vehicle.
- Benefits: If you are providing benefits such as health insurance for your employees, you can factor that into your tax write offs.
- Travel: If you travel for your business keep track of your receipts, as many of those expenses are eligible to be factored into your taxes.
- Client Entertainment: One of the best ways to get to know clients or close a deal is to sit down with them for a meal. This is a business expense and can be taken off your taxes.
- Contractor Labor: Lots of small businesses utilize freelancers or contract workers to meet their goals, and this type of labor can be taken out of your taxes.
- Equipment Rentals: Just like the space you rent for your office, if you rent equipment make sure to mark it for your tax return.
- Education: This applies both to your self and your employees. If your business is paying for anyone to pursue their education and advance their business knowledge, it is tax deductible.
- Startup: If you are running a new business, go back and look at your startup expenses. Startups are considered capital expenditures, and you can deduct some of these costs from your tax return
- Business Loan Interest: If you have a business credit card, have taken out a small business loan, or are paying on a mortgage, you will have to make interest payments on each. However, the interest you pay on those can be used as a business tax write off.
- Inventory: In most cases, you can’t deduct your inventory. However, if you are in a service industry that also retails goods, you may be able to count those goods as supplies and materials, making them eligible for a deduction.
These fifteen tax deductions for small businesses are just the tip of the iceberg for how to streamline small business taxes this season.
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