One of the best ways to reduce your annual business expenses is to reduce your tax burden. You may not realize that you are missing one or more of these great tax deductions that can help you keep more of the money you make, and make your business more profitable.
Going Into Business Expenses
Did you know you can write off a number of the massive costs that you incur going into business for yourself? Any startup and organizational costs are considered capital expenditures by the IRS, which means you can deduct up to $5,000 of both categories.
If your business has an office, you can fully deduct your utility bills from your tax burden, including water, power, trash, and telephone bills. Your phone bill can include your cell phone, but any personal calls you take on that line should be deducted from your overall phone bill, as they are not tax deductible.
You need a space to operate your business—a space you most likely have to pay for. If you are renting your space, you can deduct your lease payments on your taxes. For home-offices, you can deduct the cost of the part of the house that you use for your business from your taxes, so long as you meet the eligibility requirements.
You can write off the interest you pay on your small business loan on your taxes. And it’s not just business loans either; your business credit card interest and interest you pay on your mortgage are also tax deductible.
Nope, that’s not a typo, and it’s not a paradox either. It may seem strange, but you can actually write off some of the taxes you incur from running your business, including federal, state, and local income taxes, real estate taxes, employment taxes, and sales taxes.
Legal or Professional Fees
If you hire a lawyer to help you with an issue or an accountant to help you straighten out your books or do your taxes, you can actually deduct almost all of their fees from your taxes, except for any business acquisition legal fees.
If you have ever lent any money to an employee or a vendor, or performed a service for a client and haven’t been repaid yet, the IRS considers that “bad debt,” and allows you to write it off on your taxes. However, you must also be able to demonstrate that the debt is business related and not personal.
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