Posted by Fletcher Accounting and Tax Service Inc.

Tax Deductions for Small Businesses

Tax Deductions for Small Businesses

If you have a business, there are a variety of small businesses tax deductions you can use for income tax. Knowing about these in advance is helpful so you can be organized and have the receipts you need at tax time, instead of having to dig through all your paper. This will make the process go faster and you won't feel the need to dread it so much.


Deductions

The best thing about small businesses tax deductions is that they decrease the amount of tax you owe the government. When you are just starting your business and you need every penny, this is especially helpful. The less money that you have to pay the government, the more you have in your business pocket to expand your business and be successful.


If you aren't sure if you can deduct an item, ask yourself if it's a common expense in your industry. Another consideration is if it is something you would have purchased even if you didn't have your business. For instance, if your business is doing web design, you probably don't need a fancy cappuccino maker but a large monitor would be useful. Going to the government's website can help if you aren't sure.


Keep Receipts

When you want to use something as a deduction, you need to have the receipt. If the IRS decides to audit you, they are going to want to see the paperwork. Keep your receipts somewhere handy and organize them in a way that makes sense to you. It may take a bit of time to find the right system and while you are sorting that out, make sure to create copies/scan of all your invoices. This way you have a backup copy in case something happens to the original receipt.


Keep Current

Of the biggest issues, people find when it comes to tax time and sorting out small businesses tax deductions is the pile of paper they have. Many people dread doing their paperwork so they put it off. But realistically, if you set aside a packet of time each week, or at a minimum, once a month, you will keep on top of it. Then when tax time comes, you will have the numbers you need and filing your taxes will be a breeze.


Vehicles

Depending on the nature of your business, you may want to use your personal car for the business. This is acceptable for your business; you just need to keep proper records. Track the mileage you put on the car and whether it is personal or business purposes. From there, you will determine what percentage is business related and you can use that portion of vehicle expenses for your small businesses tax deductions. If twenty percent of the usage is for the business, you can use 20% of all fuel, repairs, maintenance, and insurance as a deduction for your business. Again, keep copies of all the receipts for future proof.


As with anything tax related, if you are not sure, it is best to talk to a professional accountant.

Fletcher Accounting and Tax Service Inc.
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