Tax Deductions Tips for Small Businesses

Whether you own a web design firm or another type of small business, every penny counts. So it’s always a good idea to get the most out of your business and not give any of your hard-earned profits to the taxman unless you absolutely have to.

When you file your business taxes this year, keep these four potential tax deductions in mind:

  • Write Off Your Expenses — Business expenses include things like office supplies, equipment furniture, business meeting meals and other things. But the tools you use to promote your business are also considered to be expenses. Don’t think something is too small to matter, either. Little things can quickly add up. These include such expenses as ATM credit card and other fees that are charged to your business or bank account, Internet charges, and even classes, seminars and other educational tools you attended in the past year to benefit your business.
  • Your Employees’ Expenses Are Your Expenses, Too — If you reimbursed your employees for such things as gas, meals, hotel charges, travel expenses and other out of pocket expenses, these are considered expenses to your business and can be claimed on your taxes. Make sure you have an “accountable plan” that shows exactly why these reimbursed expenses were business related. Plus, you will need to keep important backup documentation such as receipts in case the IRS wants to see them later.
  • Your Can  Deduct a Home Office — Do you run your web design or other small business out of your home? Then you may be able to claim a deduction on your taxes. Not every home office will qualify and there are strict guidelines that regulate which deductions are kosher and which will attract the attention of IRS auditors. But as long as you play by the rules, you could save yourself a big chunk of change when you pay your business taxes.
  • Bad Debt Expense Can Be Written Off — If you have uncollected invoices or products you shipped or delivered that your clients’ somehow never paid for, you may be able to claim these bad debt expenses on your business taxes by deducting the cost that you should have been paid from your taxes.

Get the Help You Need 

One word of warning: Tax rules can be very complicated and they can change substantially from year to year. If you aren’t experienced at doing your business’s taxes, it’s probably a good idea to leave it to a professional accountant or tax preparer. Usually, they can tell you right away (and accurately) whether something you want to claim as a deduction is legit or not. Plus, they may have further suggestions that you never thought about.

There are also a surprising number of high-quality yet affordable web-based software programs you can use that include the most up to date information about tax code. Typically, you can use these programs to do your business’ taxes online in just a few short hours.

Whichever route you choose, the money you spend in hiring a professional tax preparer or paying an online software service to help you with your taxes is usually money well spent. Not only can it help you find every penny you are entitled to, but it can keep you from getting in trouble with the IRS.


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