There’s arguably nothing that excites small business owners like hearing the word small-business tax deductions. Small business tax deductions help businesses save a lot of money regarding taxation.
But the problem is that most business owners are unaware of the existing small business tax deductions or don’t just keep detailed records of their expenditures. Here are small-business tax deductions every small business owner should know:
Inventory
Certain businesses buy or manufacture products for resale. If this is the case, one can deduct the cost of their inventory or the total cost of goods sold. A business owner will be required to take stock of their merchandise at the start and end of every tax year to determine the price of products sold.
Insurance
Most businesses usually purchase some kind of business insurance. The cost of business continuation insurance, business owner’s policy, and business owner’s health insurance are all one hundred percent deductible. Other deductible insurance policies include liability coverage, property insurance, worker’s compensation costs, auto insurance, business interruption insurance, and malpractice insurance.
Utilities
Any utilities used within the business are 100 percent deductible. This includes things such as electricity, water, and telephone bills. But if you have a home office with a landline, the cost of the first landline doesn’t qualify as a deductible.
Auto Expenses
If a business owner has a vehicle or vehicles operating, they can deduct anything related to the vehicle expense. But they must produce recorded evidence to prove that the cars were used for business purposes.
Business Property Rent
If a business is being run on a rented property, a business owner can deduct the rental or lease payments from the taxes. Those who operate businesses from their homes can also check with IRS to find out which type of deductions they qualify for.
Office Supplies
Pens, paper, boxes, staples, etc., may appear small but can cost a business a considerable amount of money. It is good to keep records of such expenses to deduct them from annual taxes.
Office Furniture
Office furniture is also regarded as a form of office supplies. This means that they can qualify as deductibles in your taxes.