The US government pulls in about $4.5 trillion a year in income and payroll taxes.
Whilst that may be great for funding things like schools and roads, paying taxes can really hit small businesses where it hurts.
The good news is that there are a lot of deductions you can make as a small business. So many, in fact, that you may be missing out on several on them.
Read on as we present our tax deduction checklist to make sure you never miss a deduction again.
2020 was the year that more people worked at home than ever before.
If you have a room at your home that you use solely for work purposes then you should be eligible for a tax deduction. Calculate the area of your office and divide this by the total area of your home. You can then claim this fraction of expenses such as rent, insurance, and utilities.
Even if you don’t have a dedicated room to work from, you can still claim for office supplies.
These include things such as paper, pens, notepads, and even business postage. If your business ships products on a regular basis, you wouldn’t be able to claim this expense under office supplies, however.
If you use a vehicle as part of your business, you can deduct some of the expenses incurred.
If you use the vehicle for personal use too, you have a couple of options. You can either keep track of the mileage that is used specifically for work purposes and work out the exact amount that you’ve spent on gas, maintenance, parking, and so on. Alternatively, you can just claim the IRS standard mileage rate for the business miles you’ve done.
To maximize your savings, work out both options, and see which gives you the bigger deduction.
If all this tax talk has your head in a spin, you can always hire someone to help.
Not only does hiring tax accountants such as Schultz & Associates mean that you won’t miss out on any deductions, but you can even make deductions on their fees.
You need to be sure that any professional fees you do deduct are reasonable, but if you’ve hired a tax accountant, they’ll do that for you.
There’s no such thing as a free lunch.
There is, however, a tax deduction if you take someone out for a business lunch. You can typically claim 50% of the cost of a meal as long as at least one employee was present, and you didn’t go overboard on the lobster.
This is one deduction you really don’t want to miss out on.
There’s Plenty More Beyond This Tax Deduction Checklist
Whilst this tax deduction checklist covers some of the important things you don’t want to miss, there are plenty more tax deductions available.
The best way to ensure that you don’t miss out on any deductions that you could be making is to hire a professional. They may be able to help you reduce your tax liability considerably.
For more useful content, be sure to take a good look around the rest of the site.