After years of paying taxes, most of us become pretty familiar with the process in terms of our unique deductions.
Sure, it takes some reviewing to get the exact amounts, but we know where to look.
That changes when you become a small business owner. You’re now eligible for a number of other tax deductions. Unfortunately, if you don’t know about them, it’s not as if the IRS is going to remind you.
Here Are 5 Tax Deductions You’re Entitled to as a Small Business Owner
As a small business owner, you know how important it is to keep your overhead low. Taking these five tax deductions will ensure you keep more of your profits where they belong: in your pockets.
1. The Price of Gas
No matter what line of business you’re in, if you own a small business, it’s probably fair to assume that you spend a lot of time driving around, especially if this is your first year.
Even if you don’t have a company van or truck, you still get a tax deduction for the gas mileage related to your small business needs. You can either accept the IRS standard mileage rate (which changes every year) or you can use a mileage-tracking app to ensure you receive the exact amount you’re owed.
2. Employee Salaries
If you began your small business with employees, this one is probably hardwired into your brain.
However, if you took the common route of beginning as your small business’ sole employee and didn’t hire anyone until after a year or two, you might forget that their salaries are deductible (as yours are not).
Furthermore, this also applies to contract labor depending on the IRS’ standards for minimum payments for that year.
3. Equipment Depreciation
Again, most small business owners know that they can deduct the price of equipment they purchase to support their company.
What many don’t know is that the depreciation of this equipment earns them a deduction. Section 179 of the tax code covers both. Simply put, you should receive a 50% bonus on your equipment’s depreciation.
4. The Cost of Repairs
Speaking of equipment, this is another easy one to forget because most small business owners don’t take for granted that they’ll need repairs at some point during the year. When they happen, they pay for them and return to business ASAP.
However, these repairs can be quite expensive. In any case, they entitled you to a tax deduction.
5. Advertising Expenses
This comes as a surprise to many people, considering how much advertising can do to bring in profits. Also, in contrast, if you pay for maintenance that improves your equipment, the only tax benefit you’ll receive is through depreciation.
Focus on Tax Deductions Throughout the Year
As you may have gathered by now, tax deductions are something you should be assessing throughout the year, not just when it comes time to file. Contact Mooney Lyons today and we’ll lay out a number of ways we can assist you with maximizing your tax deductions and otherwise managing your small business’ finances.
This information is not intended to be substitute for individualized tax advice. Please consult your legal advisor regarding your specific situation. Mooney Lyons Financial Services and LPL Financial do not provide tax advice or services.