Small Business Tax Savings – Commonly Overlooked Deductions
If you own a small business you are well aware of the effect of taxes on your bottom line. Unfortunately, there’s no getting out of paying taxes, but there are ways to take advantage of commonly overlooked deductions in order to pay less small business taxes.
So, are you taking full advantage of your small business tax deductions?
Here are some areas that some small business owners overlook when it comes to small business tax savings:
Vehicle expenses. The IRS offers a standard deduction in regard to vehicle expenses for small business owners. Opting for the standard deduction may save you time and energy going through the monotony of calculating mileage and gas, but it can cost you a lot in potential tax savings. Of course you’ll have to be very careful about business vs. personal mileage and gas declarations and keeping records is important in the event of an audit. Did you know you can also write off the depreciation of your vehicle? This amount can be significant if your vehicle is new.
Health insurance. Yes, your health insurance is a business expense too. As expensive as health insurance is, especially to those self-employed, it can add up to a nice sized deduction. If you are a small business owner, you can write off health insurance for yourself as well as your spouse and children. This applies if you are self-employed as long as do not have another full-time job that offers insurance, or your spouse’s employer offers insurance to cover the family.
Kids. The IRS gives you a break for the number of dependants, and also gives you a break for hiring your kids for your business. As a small business owner, your children are allowed to earn as much as $5,700/yr untaxed, and you can write that amount off. If you are going to take advantage of this deduction, it’s very important that each has a W2 on file.
Home office. If you work out of a home office, you’re incurring expenses that are eligible for deduction. Phone, internet, and utilities are perfectly reasonable deductions. As with vehicle expenses, it’s necessary to differentiate between business and personal use for these home office deductions.
If you own a small business and need assistance with your small business taxes, allow us to recommend an accountant. We have partners that are accounting professionals, offering a variety of tax and financial services at competitive rates. From business planning to tax preparation to payroll, they will deliver company specific tax savings for your small business. Our accounting partners have helped thousands of small businesses with small business finances and tax filings, ensuring that those businesses get to keep more of what they earn.