10 Business Tax Write-offs for Small Businesses
It’s all profit and revenue — until you remember that tax return filing season is coming. As a business owner, one of your obligations is paying business taxes.
Let’s be honest — taxes take a huge chunk out of your profit.
However, what if we were to tell you that there are expenses you can write off? By knowing about business tax write-offs, you can lower your taxable income and enjoy more of the money you make.
Business tax write-offs will vary from one business to another. For LLC owners or sole proprietors, these are the expenses you can include in your tax return to reduce your business taxes.
Read below and watch this short youtube video to make sure you are taking home as much money as you can:
1. Business Insurance
You can include business insurance premiums on your tax return to reduce your taxable income. Business insurance is tax-deductible since the Internal Revenue Service (IRS) deems it an essential business expense.
2. Office Expenses
You can also deduct your office expenses — like supplies, phone and internet costs, home office expenses, etc. — from your business taxes. Of course, office expenses are tax-deductible as long as they are necessities for your business. Be prepared to prove that you’ve used your office just for your business.
3. Business Software or Services
If you’re using professional services or software for your business, you can write it off on your tax report. Business services like legal, accounting, or payroll count towards necessary business expenses and make you eligible for a deduction.
4. Education or Professional Development
Any educational resource or course that improves your business also qualifies as tax-deductible. Under professional development or educational resources, the following count as small business write-offs:
- Courses related to work
- Subscriptions to publications
- Books or other published materials related to your business
5. Work-related Travel Expenses
If your business requires you or your employees to travel, you can write off travel expenses on your tax return. Work-related travel covers transportation fees, meals, and accommodations. Rental car fees during the business trip also fall under work-related travel expenses.
Do you have a machine or expensive item that’s crucial to your business? Over time, it may depreciate. As the item decreases in value, you can write off the rate of depreciation in your tax return.
To calculate depreciation, take the item’s cost at the time you bought it and subtract the current cost.
7. Charitable Donations
As an LLC owner, you don’t have to report charitable donations on your business tax return. Rather, you can report it on your personal taxes.
8. Real Estate Taxes
You can claim up to $10,000 when you write off your business’s real estate taxes. Writing off your real estate taxes is possible at the state and local level but not federally.
9. Moving Expenses
Did you just move? If you moved and the move incurred costs, you can write the costs off as moving expenses. Moving expenses allow you to deduct the entire costs of your relocation from your total business tax obligations.
10. Startup Expenses and Marketing Costs
Starting your business will cost money. If you just started your LLC within the last tax year, you can claim as much as $5000 when you deduct your startup expenses.
You can also deduct your marketing costs from your business tax liabilities.
Don’t Write-off Business Tax Write-offs
Business tax write-offs are legal and effective ways to reduce your tax obligations. By knowing which expenses are tax-deductible, you’ll be slashing your business taxes effortlessly.
A CPA can help you calculate your tax liabilities and business tax write-offs. If you’re hiring one, you’ll need an independent contractor agreement that clearly outlines your CPA’s roles and responsibilities.
And, Drafted Legal has you covered with legal templates.