Remember Small Business Tax Benefits Help Your Bottom Line
The United States tax codes provides some reprieve for small businesses in terms of taxes but only if they obey all the rules. There are many small business tax benefits that owners and operators need to know. Small business operators must keep up with important dates, do ample research and maintain proper records if they want to enjoy beneficial tax deductions. I’ve included some common, but important deductions that small businesses should be aware of and take advantage of in order to lower their tax burden.
Travel expenses – Business trips that demand stays in hotels are fully tax deductible. Keep in mind that you can also deduct 50% of the cost of all meals when you travel for business. Other expenses such as rental cars and plane tickets are important for small businesses person to track.
Auto expenses – Cars are expensive to maintain and keep fueled up for everyone. However, when you are a small business car related expenses are a part of operating your business. So, mileage, gas and maintenance costs are all tax deductions. These add up quickly, especially if operating your small business includes a lot of long distance driving. The amount spent for auto expenses might surprise you!
Software – Businesses need computer software to run various operations that can help to maximize profit. This software can be expensive to acquire and/or it may have monthly fees involved for its use and support. This is why the government allows deductions in order to reduce small businesses tax burdens for such materials as it is key to business growth.
Healthcare – Deductibles on health care can be confusing for the small business owner but they are an essential way to save cash. Insurance premiums are fully deductible as an adjustment to income but the amount deducted cannot be higher than the total profit of your business.
Current expenses – Do not forget about ongoing, everyday expenses for your business. Rent, electricity, water and other utilities are also eligible to be used to cut the cost of your taxes. Operational costs such as these can burden a small businesses finances, but with proper record keeping it is possible to enjoy profitable tax breaks.
Bad debts – It is common knowledge, in business, that clients sometimes default on payments when you have extended credit to them. This leads to losses for you. The only problem here is that the rules on bad debt deductions primarily apply to goods and not services. The reasoning is that it is not possible to recover lost time.
There are many more small business tax benefits and it is up to you to learn how to take advantage of them. If you do not know how to go about it, enlist a professional accountant with experience who will help you follow all the rules to make your business eligible for the important deductions.
Remember, when it comes to business tax deductions knowledge is money.