The clock is ticking towards the end of the year, and if you own your own business, collecting taxes can be complicated. There are instances when you are allowed to write off certain costs that are beneficial to your business and that allow you to pay less taxes. One of these instances is by claiming a small business owner tax deduction.
If you aren’t sure how to go about finding such deductions, we’re here to help. Today, we’re providing a list of several deductions that you can claim to pay less taxes. Keep reading to learn more about the tax deduction cheat sheet.
Salaries and Wages
Small business owners can take advantage of some great tax deductions related to salaries and wages. The criteria for claiming deductions on salaries and wages can be complex, but it is important to understand them. This is especially true when it comes to filing taxes and preventing an audit.
For example, a business owner can deduct all salaries, wages, bonuses, and commissions paid to employees, as well as any taxes or payments associated with those payments. If a business owner holds any external directorships, they may be able to deduct their fees. A business payroll is very useful in debuting taxes for your business.
Business Startup Expenses
One important tax deduction to consider when first starting up is for business startup expenses. These expenses, which may include the purchase of business property, services, or supplies, can be deducted from a business’s taxable income in the first year of the business.
To help small business owners better understand the tax deductions available to them for business startup expenses, a tax deduction cheat sheet can be useful. If you want to know more, professional bookkeeping services located here can help you.
Home Office
For those claiming this deduction, some key points to remember are to calculate the business use of the home and keep a detailed record of expenses. They should also understand the related credits available and be aware of the potential of self-employment tax deductions.
The home office deduction saves small business owners money. So it’s important to follow the rules to maximize savings. With all deductions, items such as office furniture, utilities, rent, and mortgage interest may be deducted, provided they are used solely for business purposes.
Business Meals
Generally, the Internal Revenue Service (IRS) allows you to deduct 50 percent of the cost of meals. Which you have while conducting business. To qualify, the meals must be associated with the active conduct of a business, must be reasonable in amount, and not lavish or extravagant.
It also must be primarily for the benefit of the business. It is important to keep any receipts related to business meals, as well as a record of the date, type of expense, and amount. Most financial organizations use these tax write-offs.
Use This Tax Deduction Cheat Sheet
Small businesses are a key component of a strong economy and should take advantage of all available deductions. With the correct understanding of deductions, a small business can become a powerhouse.
Ultimately, the key to taking advantage of deductions lies in understanding the details of how to claim them. Follow this tax deduction cheat sheet to make sure your small business is taking advantage of all the available deductions! Get started today!
