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Small Business Tax Deductions: Tips on Planning Ahead for Next Tax Season

Was your first question this tax season, “I owe how much?” If so, the first place to start is to identify what you can write off as small business tax deductions next year. With a little organization and planning, you can save a lot more money than you thought possible. You work hard to make your small business profitable and successful; planning ahead will ensure your business thrives now and in the future.

Small Business Tax Deductions

Is your business taking advantage of small business tax deductions? A deduction is a business expense that can be used to reduce your total taxable income. What expenses qualify for a deduction? According to the IRS, expenses that qualify for a deduction must be “both ordinary and necessary.”

The IRS further explains that “An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.”

Consider the following list of possible deductions for your small business that you might be overlooking. (Keep in mind that you will have to think about the specifics of your business and make sure you are eligible for a specific deduction.)

  • Travel – Transportation between your home and business location can be deducted. Lodging, baggage, dry cleaning and business calls can also be a write-off. Even a passport purchase is considered an expense if it was purchased for a business trip.
  • Meals – Most small business owners use the 50% rules when it comes to deducting meals, although it is possible to claim a standard meal deduction ($51/day in most locations).
  • Entertainment – Similar to meals, 50% of entertainment expenses are deductible (e.g. entertaining customers, parking fees, etc.).
  • Home Office – If you have a space in your home that is used exclusively for business, you might be eligible for the home office deduction; this deduction will be based on the size of the space.
  • Office Supplies – Office supplies that you need to run your business are deductible, including: pens, staplers, USB thumb drives, printer ink cartridges, etc. Items like postage and furniture are also included in this category.
  • Utilities – As long as utility costs are not personal, expenses like heating, telephone services, electricity, sewage and water are deductible.
  • Contractor Labor – Similar to employee wages, independent contractor wages can also be deducted.
  • Magazine Subscriptions – If you have magazine and newspaper subscriptions that pertain to your business, you can deduct them.
  • Start-Up Costs – If you have just launched your business venture, you should know that you can deduct up to $5,000 of business start-up costs and $5,000 of organizational costs.

Is your business struggling with cash-flow? Taxes are not the only aspect of your business that require planning ahead. If you need quick cash but are struggling with bad credit, consider a merchant cash advance bad credit. Your business can have capital in as little as 24 hours, so you can move on and focus on other tasks – like preparing for tax season.

Author Bio: As an account executive, Michael Hollis has funded millions by using alternative funding solutions. His experience and extensive knowledge of the industry has become a true asset for First American Merchant.