Want your small business to be more profitable? Remember, it’s not how much you make. It’s how much you keep. Check out these common tax deductions before you prepare your next federal income tax returns. If you qualify—but aren’t taking—these deductions, then you’re leaving money on the table.
1. Home office expenses: Once upon a time, this deduction was known to trigger audits. But today qualifying is easier (and less likely to raise red flags with the Internal Revenue Service). In addition, figuring out the deduction is also simpler.
2. Business use of a vehicle: You can use either the actual prorated expenses for your automobile(s) or the IRS mileage allowance.
3. Interest on business debt: This deduction includes business-related credit card transactions as well as, say, the interest on the mortgage for your building or the interest on a loan for purchasing inventory or equipment.
4. Marketing expenses: The costs for advertising or otherwise promoting your business (TV and radio ads, printed brochures, etc.)—including the costs of hiring a website developer.
5. The cost of organizing a business entity: For instance, if you use a lawyer to create incorporation documents, the legal fees are deductible.
6. Pre-opening expenses: These costs might include preparing your storefront for shoppers or special signage to attract passersby.
To learn more about your federal tax obligations and qualifying deductions, consult the IRS Publication 334, Tax Guide for Small Business, which offers excellent information that every small-business owner needs to know.