Some Valuable Small Business Tax Deductions - Tax Professionals Member Article By Pat Raskob
Posted by Pat Raskob

Some Valuable Small Business Tax Deductions

Some Valuable Small Business Tax Deductions

Generally, tax deductions are expenditures that business owners can subtract from their taxable income. It is economical as it saves cost by reducing the tax amount you need to pay.

Most business owners are clueless or confused about the type of tax deductions.

Read further as we have compiled a list to help you navigate your way through. The following are some valuable small tax deductions.


Tax Deductions for Small Business Owners 

Let's dive in.


Inventory

If you have an inventory type of business where you produce things or buy things for resale, you can subtract the price of your inventory or amount of total items for resale. Therefore, you must take stock at inception and the end of the year to know the amount of items people bought.

Here’s an idea of the various bills that help in determining the number of items purchased: total price of raw materials, price of goods, labor costs, amongst others.


Rent

If perhaps you're using a leased property, it’s possible to also remove your rental or lease payments from taxes.

On the other hand, if you have an office space in your home and do your business from home, you can do an eligibility test with the IRS to know if you are qualified for any deductions. The following are deductible home business expenses – insurance, repairs, mortgage interest, depreciation and utilities.


Utilities

Anything that is useful or serves a purpose in your enterprise are deductible. They include but are not limited to electricity, telephone bills, and water. But, if you work from home and work with your home landline to run your business, the expenses of the first landline are not deducted. However, the subsequent ones are.


Travels

If your business requires that you travel frequently, you should deduct your travel expenses. However, this will mean that your business takes you outside the city or environment where the business is. Examples of deductible travel costs are tolls, lodging, taxis, and airfare.


Insurance

At some point, most enterprises will require some  form of insurance for unforeseen situations.

The expenses of the enterprise owner's health insurance, policy, and business continuation insurance are deductible.

The various deductible insurance packages are liability coverage, auto insurance, property insurance, workers' compensation costs, malpractice insurance, business-provided employee life insurance, and auto insurance.

Remember that a growing business is entitled to a 50% tax credit under QSEHRA- Qualified small employer health reimbursement arrangement for health insurance.


Furniture & Stationeries

Although they may seem small, they can be deducted from your taxes – office furniture, pen, cleaning agents, staples, papers, printers, boxes, and other stationery.


Car Expenditure

If you use a vehicle for your business, you should consider deducting what you deem fit as car expenses. But you must keep records to prove it was used for business and the miles covered.

You may use IRS mileage charges, that is $0.58 per mile. However, if your car functions for personal and business purposes, you should divide the expenses according to the mileage.


Employee salaries and packages

Generally, your employee salaries are deductible, alongside all commissions and bonuses. But in this case, LLC members sole proprietors are excluded because they are not regarded as employees.

Also, deductions can be made from packages like education assistance, qualified retirement plan accounts, and life insurance adoption assistance.

Employee gifts are equally not left out of these deductions; you can deduct as much as $25 per employee yearly.


You must utilize the benefits of available tax deductions because they are enormous. The above and more are the types of small business tax deductions you should know.


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Pat Raskob
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