For small business owners, maintaining strong cash flow is essential for the growth and prosperity of the company. One important aspect of trimming unnecessary expenditures is to claim all available tax deductions. Although you are generally not allowed to deduct personal expenses, here’s a look at some of the deductions that can save money for your business.
The Costs of Starting Up
Starting up a new company can be extremely expensive. Initial costs include acquiring office space, purchasing equipment, and supplies, and marketing your products or services. According to the IRS, up to $5,000 in start-up expenses and $5,000 in first-year operational expenses can be claimed as tax deductions.
Maintaining a Home Office
If you use a portion of your home exclusively as an office, you can deduct that space at tax time. To figure the amount of your tax deduction, multiply the total square feet that your home office takes up by $5. You are allowed a maximum of 300 feet.
The Use of Vehicles
Claim tax deductions for maintenance and gas if you make use of your personal vehicle for business reasons. For vehicle expenses, you have the option of either deducting a fixed amount according to the miles you drive, or the specific amount that you spend on fuel, repairs, insurance, and other expenses.
Traveling for Business
Travel is one of the tax deductions you can claim as a business. Hotels, airfare, and parking are completely deductible, while meals are 50 percent deductible. If you are planning on claiming this deduction, be sure to keep records such as receipts, credit card statements, and bank statements so you can prove to the IRS that these deductions are valid.
Health Care Expenses
Whether you acquire health care policies in your name or your company’s name, you can claim these expenses at tax time. Deductible costs also include premiums for dental and long-term care.
For more advice about tax deductions for small businesses, get in touch with Affinity Capital Funding.