For small business owners, finding savings wherever possible is a must. Did you know there are seven common tax deductions business owners sometimes miss? Read on to find out how you can avoid these mistakes and get the biggest tax return for your business.
You can deduct driving expenses, education expenses, and more from your business tax returns. See if you qualify for any of the following.
Every year the IRS sets a standard deduction rate for mileage incurred during car trips related to business. This year (2023) that rate is $0.665 per mile. Track your business-driving mileage each year and multiply it by the IRS mileage deduction rate to net big deductions on your business return.
A reliable phone is a must for businesses today, and the IRS recognizes this with deductions for charges related to your business phone. To take advantage of this, determine what percentage of the time you use your phone for business vs personal use. Whatever percentage of your phone use is related to business, you can deduct that percentage from your business tax return.
Independent contractors and small business owners can deduct expenses directly related to their home offices. You can write off improvements you make to this space, such as purchasing a desk or office chair. Be careful not to abuse this deduction, as the IRS is very strict about what constitutes valid business use. For more details, take a look at the IRS guidelines for home office deductions.
Small business owners can deduct educational expenses for themselves or their employees from their business tax returns. Keep in mind there needs to be a clear business reason for the class or training for it to qualify as a deduction. This is a good rule of thumb for all small business deductions. The heart behind them is to make business easier, so if you can prove that something accomplishes this, there is a decent chance you can deduct it.
Like your phone bill, the IRS knows that reliable internet is a must-have for small business owners. To that end, you can deduct your home internet bill from your business tax return. The process is the same as it is for the phone bill. Simply determine the percentage you use your internet for business purposes and deduct that percentage from the amount you paid for internet in the return year.
You can also deduct local travel expenses if they are properly tracked and assigned a viable business reason. The best way to do this is to use credit cards specific to your business for all travel expenses, such as business meals and accommodations. This will allow you to track all your transactions in one place. There are apps you can use to save receipt images, too, if you want to be extra safe and avoid the clutter of keeping paper receipts.
You can deduct parking and tolls for business-related appointments and trips from business tax returns.
You deserve to keep as many of your hard-earned profits as you can. When you hire Levy & Associates Tax Consultants, you’re ensuring that you get the tax return you deserve. Let us help you secure every business tax deduction you deserve and maximize your return. Contact us today to learn more.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.