Most Commonly Used Tax Deductions Featured
Small businesses can write off several expenses as tax deductions to help lower the amount they owe on their income tax. Here are a list of 8 common small business tax deductions:
1. Business Meals
As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business.
2. Work-Related Travel Expenses
All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals, and more. You can reference the IRS website for a full deductible business travel expenses list. To qualify as work-related travel, your trip must meet the following conditions:
3. Work-Related Car Use
If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it. If your car use is mixed between business and personal reasons, you can only deduct expenses related to the vehicles business usage.
4. Business Insurance
You can deduct the cost of your business insurance on your tax return. If you have a home office or use a portion of your home to run your business, you can deduct your renter’s insurance costs as part of your home office write-offs.
5. Home Office Expenses
Under new simplified IRS guidelines for home office expenses, home-based small businesses and freelancers can deduct five dollars per square foot of their home used for business purposes, up to 300 square feet.
6. Office Supplies
You can write off office supplies, including printers, paper, pens, computers, and work-related software, as long as you use them for business purposes within the year they were purchased.
7. Phone and Internet Expenses
You can deduct these expenses if using the phone and internet is vital to running your business. If you use the phone and internet for work and personal reasons, you can only write off the percentage of their cost that goes toward your business use.
8. Depreciation
When you deduct depreciation, you’re writing off the cost of a big-ticket item like a car or machinery over the valuable lifetime of that item rather than deducting it all in one go for a single tax year. Businesses usually deduct depreciation for long-term business investments that are more costly, so they’re reimbursed for the expense over the entire helpful lifetime of the item.
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1. Business Meals
As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business.
2. Work-Related Travel Expenses
All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals, and more. You can reference the IRS website for a full deductible business travel expenses list. To qualify as work-related travel, your trip must meet the following conditions:
3. Work-Related Car Use
If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it. If your car use is mixed between business and personal reasons, you can only deduct expenses related to the vehicles business usage.
4. Business Insurance
You can deduct the cost of your business insurance on your tax return. If you have a home office or use a portion of your home to run your business, you can deduct your renter’s insurance costs as part of your home office write-offs.
5. Home Office Expenses
Under new simplified IRS guidelines for home office expenses, home-based small businesses and freelancers can deduct five dollars per square foot of their home used for business purposes, up to 300 square feet.
6. Office Supplies
You can write off office supplies, including printers, paper, pens, computers, and work-related software, as long as you use them for business purposes within the year they were purchased.
7. Phone and Internet Expenses
You can deduct these expenses if using the phone and internet is vital to running your business. If you use the phone and internet for work and personal reasons, you can only write off the percentage of their cost that goes toward your business use.
8. Depreciation
When you deduct depreciation, you’re writing off the cost of a big-ticket item like a car or machinery over the valuable lifetime of that item rather than deducting it all in one go for a single tax year. Businesses usually deduct depreciation for long-term business investments that are more costly, so they’re reimbursed for the expense over the entire helpful lifetime of the item.
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