When you own a small business, you may wonder about how your business expenses impact your taxes. While personal expenses are not tax-deductible, even if you use them associated with your business, there are lots of things that can help offset your taxes.
If you use your vehicle for business purposes, some of the money spent on maintenance and gas can be recovered. You can do this either through the actual expenses spent, which can include depreciation of the vehicle, or using a standard mileage rate. Tolls and parking fees are also tax-deductible.
Starting a new business can be an expensive prospect. From equipment to office supplies to advertising, there is a lot involved in start-up costs. Fortunately, the IRS allows a deduction of up to $5,000 in start-up expenses as well as $5,000 in organizational expenses for the first year of business operations.
While home office deductions were once a complex and frustrating calculation, it is much easier to determine the deduction for working from your home. Simply multiply the square footage of your home office space (space used exclusively for business purposes up to 300 sq. ft.) by $5.
If you travel for business purposes, you can deduct hotel costs, airfare, car rentals, and even meals. The deductions vary based on the type of expense, and they must be necessary and ordinary expenses associated with travel. If you want to take advantage of these deductions, it is important to keep careful records of all expenses, including receipts.
Health insurance is an important expense, and while individuals no longer receive a tax penalty for going without insurance, healthcare can be outrageously expensive without support from insurance. Fortunately, business owners can deduct health insurance premiums for tax purposes.
When you own a small business, you can use tax deductions to help your finances. Knowing what you can deduct can help make a big difference when you are doing your taxes, and might even help you achieve your financial goals more easily.