Small business owners can often times find savings where
they least expect. For company
heads preparing to do their taxes over the next couple of months, there are savings waiting if you know where to look. To get
the best deductions possible when running a small business, make sure you review the following:
Home expenses Many small business owners make their residence their primary office space.
In these instances there are a number of deductions that you can declare including a portion of your monthly rent, electric bill, phone bill,
office equipment and maintenance and
upkeep of your office. Keep in mind that the ‘room’ you use as your
office must be utilized exclusively for business purposes. Deductions for a home office are
typically based on the percentage of the residence devoted to business use.
Auto expenses One of the most common deductions is the usage of your automobile for transportation to work-related functions. According to the IRS,
current rates for such travel are 55.5 cents per mile for business miles
driven, 23 cents per mile driven for medical or relocation purposes, and 14
cents per mile in relation to service of charitable organizations. Make sure
you log the mileage necessary for business travel so that you can present it to
your accountant at tax time.
Start-up and
expansion You can include some deductions for starting
and expanding a small business. All start-ups and expansions
for small business are not the same, so be sure to speak with a tax expert.
Schooling and
training If you are taking classes or attempting to get
certified for the business field you are currently in, you are permitted to
deduct such expenses. Save receipts for educational material
purchases such as books.
Business meetings Record data when it comes to meeting clients. Half of your meals and/or entertainment expenses from meeting with business
clients will be permitted deductions.
New regulations in effect for tax year 2013 The
IRS recently announced that it is offering a new, simpler option for
tabulating the home office tax deduction, permitting small business owners and
employees who work out of their residence and who maintain a qualifying home
office to deduct up to $1,500 per year. The
new option permits qualified taxpayers to deduct annually $5 per square foot of
residence office space on up to 300 square feet, for as much as $1,500 in
deductions. To use the new option, taxpayers will reportedly work with a much
simpler version of the current 43-line form. The new option for the home office deduction will be not be in
effect until the Tax Year 2013 return, which many taxpayers file early in 2014. In
the meantime, dig out those receipts, review those mileage logs, and round up
any other expenses you accrued over the last 12 months from working out of your
home.
About the author: With 23 years of
experience as a writer, Dave Thomas covers a wide array
of financial topics, including small business payroll.
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