Starting your own business is no easy task. You often have to navigate unfamiliar territory just to track your business expenses and reach your customers. Then, when it comes time to pay taxes, you’re hit with seemingly every tax known to man. This might leave you thinking, “I owe HOW MUCH?”
Luckily, there are a wide variety of business expenses that you can deduct to reduce your tax burden, but knowing just how and when you can deduct can be tricky. If you’re here, you probably already know that you can deduct business related mileage on your car, but there are so many other ways to save. That’s why we created a list of the 10 Most Common Tax Deductions for Small Businesses.
It’s never too early to get a head start on tracking your tax deductions. There are many great tools and resources to help you get started. TripLog helps you track your business mileage and expenses and organizes them in an easy-to-read, IRS compliant report, so you can maximize your tax deductions and peace of mind. Get started with your 30-day free trial today and watch the savings add up. We’ll be there every step of the way to cheer you on!
Did you miss our last post? Check it out to see how TripLog got it’s start and meet our Founder, Ted He.
Business expenses that are tax deductible can help small businesses reduce their tax burdens which reduce the costs associated with running a business. Business owners know that the more deductions they are able to make, the less money they will have to spend on taxes. Therefore, the value of properly tracking your business expenses can be huge. Now, what are the ten most common tax deductions for small businesses?
- Vehicle Expenses
The cost of operating a vehicle for business is deductible if there are required records to prove business usage. Using a mileage tracking app can help track your business miles automatically, allowing you to save time by not having to track your miles manually.
- Salaries and wages
Payments to employees, including salaries, wages, bonuses, commissions, and taxable fringe benefits, are deductible business expenses for the business. On the other hand, payments to owners are not deductible.
- Contract labor
Many small businesses use freelancers or independent contractors to meet their labor needs. The cost of such contract labor is deductible.
The cost of items used in a business (computers for a technology company’s staff), as well as postage, are fully deductible business expenses.
- Rent on business property
The cost of renting space — an office, boutique, storefront, factory, or other type of facility — is fully deductible.
Electricity for your facility is fully deductible. Other utility costs include your mobile phone charges.
You can deduct licenses, regulatory fees, and taxes on real estate and personal property. Your employer taxes, including the employer share of FICA, FUTA, and state unemployment taxes, are fully deductible business expenses.
The costs of your business owner’s policy, malpractice coverage, flood insurance, cyber liability coverage, and business continuation insurance are all fully deductible.
The cost of ordinary repairs and maintenance are fully deductible, while costs that add to the property’s value are usually capitalized and recovered through depreciation.
Ordinary advertising costs are fully deductible.