At the beginning of every New Year, it is once again time to start organizing records for your tax filing. Small business owners are generally at a disadvantage, especially new owners, since entrepreneurs are not generally familiar with tax laws, nor do they have a large staff of corporate tax accountants who can keep everything in order. Small business taxes require owners to do their own research about what records to include in a tax filing, or hire a dependable tax specialist who can offer advice on how to make the most of tax deductions.
If you are a business owner and need good small business tax advice, make sure you take advantage of five typical tax deductions you can take that are often overlooked.
Legal and Professional Fees
For small business tax deduction purposes, any legal or other professional fees related to your business are deductible. Legal fees can be costly, but you can take refuge from the costs by deducting them from your taxable income. As well, you can deduct fees for accountants, consultants, and professional advisors, as long as the advice is applicable to the year the costs were incurred.
Software that you use for your small business can be deducted. The IRS allows a Section 179 deduction of 100% of software costs for software purchased from January 1, 2003 to December 31, 2010. Whether it is off-the-shelf or licensed from a software developing company, be sure you take the full cost deduction for your small business taxes.
Many small business owners use their personal auto for their small business operations. If you do, you can deduct a portion of the costs to use it.
The first method for autos as a small business tax deduction is to deduct mileage at a rate set each year by the IRS. For 2009 taxes, the mileage rate is $0.55 per mile.
The second method you could choose is to deduct the actual expenses related to your auto for business use. This includes gasoline, regular maintenance, and even depreciation on the vehicle, making this a better deduction method if the auto is newer and used frequently for business use.
In addition to either method, additional auto-related costs can be deducted, such as parking and toll fees.
Business owners are allowed to deduct start-up costs from their small business taxes, such as advertising, utilities, and office rent as capital costs. The limit for these deductions is $5,000 in the year they were spent.
Educational Seminars or Conferences
Anything you do to further your knowledge in your business field can be a small business tax deduction. For example, you may take a community college course in accounting or a class to learn how to use software, and the tuition and books are tax deductible. You can also deduct the costs of seminars and conferences you attend, as long as they are related to your field of business. Don’t forget to deduct travel, meals, and lodging costs as well if you travel to an out-of-town conference.
The government wants to help your small business succeed. Take advantage of their help by deducting all that is allowed for your small business.