In 2021, there are already 32.5 million small businesses in the US. Running a small business requires time, money, and energy. The rewards of employing people and contributing to the economy make it worthwhile.
Keeping track of deductions is vital for both your present and future. That’s because the more you get on income tax deductions now, the more you’ll spare for your future – whether that means putting aside savings or paying less tax at retirement.
Not sure how to start? Keep reading below to learn more about business tax deductions and how your company can take advantage of them.
Table of Contents
Tax Deductions on Startup and Organizational Costs
These can include things like legal and accounting fees, as well as start-up costs such as office supplies and equipment. Additionally, remember that you may be able to deduct certain marketing expenses, such as website development or advertising.
Keep in mind that eligibility for certain deductions may vary depending on the type of business you operate. To maximize your tax savings, consult professional accounting services to determine which deductions you can take advantage of.
Business Tax Deductions on Your Inventory
Inventory can include the raw materials you need to manufacture your products and the finished products themselves. Keep track of how much it costs you so you can claim the deduction on your taxes by creating a small business tax checklist.
Tax Deductions on Utilities
You can deduct the cost of any utilities you use in your business, including electricity, gas, water, and sewer. You can also remove the cost of any phone or internet service you use for business purposes. Additionally, you can deduct a portion of your home’s utilities expenses if you have a home office.
Remember that you can only deduct a portion of your utility expenses related to your business. So, use your home office for personal and business purposes. You can only remove the part of your utilities used for business.
Insurance Tax Deductions
You can deduct those premiums on your taxes if you pay for health, dental, or long-term care insurance for yourself and your employees. You can also deduct the cost of business-related insurance, like liability insurance or property insurance. Be sure to keep good records of your premiums and policy information.
Business Property Rent Deductions
Suppose you’re renting commercial property for your business. In that case, you may be able to deduct a portion of the rent you’re paying from your taxes. This deduction can be significant, so it’s worth taking advantage of if you’re eligible.
To claim this deduction, you’ll need to itemize your deductions on your tax return. Keep good records of your rental payments to have accurate deduction claims. Also, remember that you may limit the amount you can deduct if your rental expenses exceed a certain percentage of your overall income.
Learn How to Maintain Your Business With these Small Business Deductions
If you have a small company, it is crucial to utilize these business tax deductions. They can save you a lot of money come tax time.
Just keep good records and receipts so you can prove your expenses. And if you’re not sure which deductions you can take, be sure to speak to a tax professional.
Want to learn more? Head on to the rest of our blog for the latest insights, tips, and guides for all your needs!