The joys of running a small business do not include scrutinizing profit and loss sheets. But, it is a necessity for those who want to run a successful business. Therefore, a bit of tax know-how goes a long way. But, not all of us go to school to be a CPA or even really know how to balance a business budget. Here are helpful tax deduction tips for new business owners.
Burning the Midnight Oil
If you speak with entrepreneurs, they admit to working around the clock. Such dedication deserves reward, and if you designate an area of your home or apartment as a workspace, you can deduct that from your tax expenses. For those with an apartment, you may need to write off a certain square footage depending on the total space. Actually, if you’re a business owner, and you don’t have a workspace at home, create one now.
Erase the Pay for Erasers
Here’s where a lot of small business people get lazy. You need to record all expenses and keep receipts, yet there’s no reason why you need to pay out of pocket for any office supplies including computers, printers, pencils, pens, ink, etc. If you run even a tiny office, the expenses are considerable per year. Keep track and erase those office supplies from your personal needs list. If you need large storage equipment, visit Reliant Finishing Systems today.
You’ll be working a lot, so you might as well be comfortable. That should be an added concern for those who house employees. They’ll need proper seating and desk space. However, you don’t need to pay for that out of your own pocket. Office furniture can also include that which you place in your home office. This could include other equipment such as a massage chair or a 3D printer. If you can justify the cost with office and business use, you can deduct it.
News That’s Fit to Deduct
You can deduct any related subscriptions including those to newspapers and magazines for the office. Also, if you rent any software to run your business that is related to client work, accounting, safety monitoring, etc., that is deductible too. While you should not err on the side of what’s deductible, you should get used to asking when you’re unsure. A knowledgeable accountant should be able to advise you appropriately.
Night on the Town
You can’t regularly go out and party at the expense of the IRS, yet you can write off any work-related celebrations, trips, and dinners. For example, if you need to attend a three-day conference in another state, you should be able to expense airfare, hotel lodgings, the ticket to the conference, any food, and needs of employees. This is one area that has a bit of gray, and you should not assume but ask your accountant and attorney first.
Plan for Retirement
You’re taxed on your total income but you can do things to reduce it without losing the money. For example, you can put a percentage of your income into a retirement fund. Also, you can work with your accountant to set up a retirement plan for employees too.
Pay It Forward
Some business owners are huge advocates for animals and aid groups. If you have a favorite charity, donate a portion of your business income toward the effort and receive a deduction from your taxes. This is not only a good move for tax purposes, but it’s great for small businesses looking to brand. For example, if you donate proceeds to an animal group, you may gain clients and partnerships due to the act of kindness.
As mentioned above, your own laziness or lack of detail could be the reason why you’re paying more money in taxes. Stay ahead, ensuring that you reserve time each week to notate any notions that should be aligned with an eventual tax deduction. Alternatively, if you don’t like the idea of being diligent, you can hire an intern or assistant to do this for you.
Hire an Intern
In some cases, you can receive a tax deduction if your business is part of a university partnership. Research junior colleges and universities in your area to learn more. It’s a great thing to allow a young person to gain work experience. Plus, people in the area may elect to do business with you because of your willingness to help youths.
Ava Horton is a small business consultant. She enjoys sharing her experience with startups by posting on small business websites.