Taxes are one thing that most people love to hate. But they're a necessary part of being an American business owner. There are ways to decrease your tax obligation, yet still pay your dues.
Ten Expenses Which Are Generally Tax Deductible
One way many business owners can offset their tax costs is through tax deductions. You can remove these costs from your overall tax burden.
- Business rent. As long as you do not hold the title or have equity in the property you can usually deduct the amount you spend in rent for your business.
- Business use of your home. Some small business owners opt to use part of their home to set up an office or work space. You can often deduct certain things like part of the mortgage, utilities and depreciation costs. This is subject to the ever-changing tax law, so always run this deduction past a tax professional.
- Employee pay. This is likely one of your largest expenses. Usually the amount is deductible on your business taxes.
- Retirement plans for yourself and your employees. There are certain tax advantages when it comes to putting money aside for retirement. There are rules in place to govern the value of these accounts.
- Taxes that your business pays. Some taxes that your business pays are deductible. This includes local, state, federal and foreign taxes.
- Interest on business debt. Usually the interest that you pay on loans for your business is tax deductible.
- Use of your car for business purposes. Mileage, tolls and parking fees are often deductible. When away on business trips, the cost of rental vehicles are usually deductible.
- Business travel and meals out. Travel that is for business can be deductible. However, there are restrictions and regulations. Meals out, on the road, or for employees and business-related events are sometimes deductible. However, talk to your tax agent about the way to deduct these costs.
- Business insurance. The cost that you pay in business insurance premiums is usually deductible.
There are, of course, a few things that don't net you a tax deduction, credit or other benefit. Your personal living expenses and those of your family often don't qualify. You also usually cannot deduct the startup costs of your business. Business assets or improvements won't usually help you out as April 15 rolls around.
Of course, be sure to check things over with your accountant. This will ensure that you are in compliance with your local and state tax laws and don't incur any penalties.
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