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The Most Common Business Deductions You Don’t Want To Miss Out On

The Most Common Business Deductions You Don’t Want To Miss Out On

As a business owner, you probably already realize just how hard making your money work for you can be. You fight costs all year long, you juggle expenses, and you’re always looking for the next best way to advance and improve your business. When it comes to tax time, you don’t want to have spent all that hard earned income on supplies, travel, or really any costs that come with running or bettering your business, without the advantage of deducting those costs from your taxable income. The government allows you to write off a vast majority of those items and expenses that you pay for out of pocket to ensure your business functions from day to day successfully. 


You have to go with the itemized deduction option.


The reason this is so important is incredibly straightforward. You’re only allowed to claim one of two types of deductions on your income tax return: Standardized or Itemized. The standard deduction amounts are one lump sum that reflect how you filed (single, married filing jointly, head of household, etc.) and that’s it. You can’t add mortgage insurance, donations or medical bills - none of the above! The itemized deduction option is the one you’ll go for if you own your small business or have the chance to write off multiple life expenses. Unless you go through the process of filing your business separately from your personal income tax return, this will be the avenue you should probably choose. If you aren’t sure which option is best for you, you should invest in the expertise of an accountant or tax preparer to better inform you on your choices.  


The list of things you can itemize for your business return is pretty extensive. The costs of running a business can be expensive, so let’s go over some of the more common deductions you can claim.


  • Home Office and Other Related Expenses – Do you happen to run your business out of your home? You’re allowed to deduct a percentage of rent, utilities, repairs, housekeeping, etc., from your tax return. You’ll need the area of your actual working space and divide by the square footage on your home. Make sure you aren’t deducting, say, your entire basement if you just happen to have a desk set up next to the sofa. Your space must be dedicated to work. If you end up being audited down the road, you’ll regret claiming more space than you actually use.

  • Office Supplies – On top of that fancy home office, you can also deduct the supplies you need to do office type work! Pens, paper, envelopes, and even other items like business cards, mailers, postage, shipping costs and printers or computers if they’re used primarily for work.

  • Startup Expenses – These are considered capital expenses, and you’re only allowed to deduct $5,000 in the first year. The remaining balance can be deducted by splitting it up over the next 15 years.

  • Contractors, Experts, Freelancers, and Other Types of Specialized Services – If you hired someone to help invent your new product, or you got a consultation to improve the work space you have, you can deduct these fees as long as their services are generally related to your business. 

  • Advertising and Marketing – If you run a newspaper advertisement, television spot, send out mailers, or you utilize any other method to get the word about your business, you can deduct those expenses. The same goes for website fees and IT costs. If you hired someone to design your website for you, that’s deductible. Whoever you pay to host said website, and also paying for the domain name are a few more ways to save on your taxes. 

  • Continued or Secondary Education – If you’re at all interested in upping your skill set as it relates to your business’s industry, that’s absolutely considered a business write off. Classes, trade shows, seminars, books and even magazine subscriptions are eligible for business tax deductions.

  • Travel Expenses – If you’re traveling to a big trade to check out new industry equipment halfway across the continent, you can deduct the cost of airfare, car rentals, and other travel related expenses. Even dining out and client entertainment can be deducted under the right circumstances.

  • Insurance – There are a few different types of insurance your business might need or utilize. Liability, workman’s comp, credit and malpractice to name a few. These premiums can add up fast, so make sure you add them in when doing your return!

  • Auto Maintenance or Mileage – If you have a work vehicle, or even a personal vehicle that you share for work trips, you can deduct related expenses. There are two ways to look at when doing this. The first is the Standard Mileage Rate, which is where you get a percentage for every mile you drive for business related endeavors. You need to keep meticulous records on this, especially if your vehicle plays double time as your work and personal car. The other option is Actual Expenses, which is where you keep track of your gas and general maintenance costs. These can be tricky to account for, so you might want to find a tax preparer to help assist you in what you can and shouldn’t try to deduct.


There are plenty more deductions you can make on your federal tax return, and we’d love to help you do it! Find a tax professional for business tax deductions here at Liberty Taxes & Business Services to get you the maximum benefits on your tax return. We’d love to speak to you about an appointment, so just click the link below to learn more about our firm. We can’t wait to get started saving you some money!


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