Small Business Tax Deductions
We don’t know many business owners who get excited about taxes, but it’s an important aspect of every business that must be managed wisely. While most of us leave it to the tax experts, understanding write-offs that you’re entitled to puts you in a position to make spending decisions that will benefit your business. We’ve compiled a list of tax deductions that small business owners often overlook so that you can keep them in mind throughout the year and at tax time.
Start-up costs – If your business is new, there are deductions you can take on expenses that you incurred before you actually opened for business. For example, market research, consulting fees and location search costs. There is a limit on these type of startup costs for your first year, but if you exceed that limit then most can be amortized over 15 years.
Software and Subscriptions – Nowadays it’s common for software to be purchased on a subscription basis, housed in the cloud. Multiple monthly software subscriptions may seem small on a monthly basis, but they add up over the year to a sizable write-off amount.
Traditional subscriptions for magazines, newspapers or industry research are also fully deductible in the year in which they are paid.
Interest Payments – If you financed anything for your business such as office equipment on a credit card, then the interest paid is fully deductible. Interest on business loans is also deductible, with the exception of loans made directly by the owner.
Employee Benefits – Just like the payroll you put out is a tax write off, so are contributions you make to employee benefit packages like health insurance and retirement savings plans.
Meals and Entertainment – While not fully deductible, costs incurred while entertaining clients or conducting business are 50% deductible. Make it a habit to write the nature of the business conducted, and with whom, on your receipt when you sign the check and you should be good to go!
Carryovers – You may have deductions that you weren’t able to take in previous years that are now eligible – for example, capital losses and charitable contributions. If you’ve changed CPAs this year it is especially important to alert them of deductions that are sitting on your books.
SilverEdge offers integration tools that will help you manage your small business and get the information you need to make smart spending decisions. Contact us today to learn how we can help you grow your business.