If you have the assets available, it is always recommended to hire a professional to help you sort out your taxes, especially during your first several years of running the business. However, educating yourself about some aspects of the taxation process ahead of time will ensure that you are getting everything you can out of it.
Here are five areas in which you can ask for tax deductions as a business owner that will be very useful for those who are running their business on a limited budget and are trying to save money in every way possible.
Start-up Costs
As a business owner you will be able to deduct everyday expenses such as money set aside for advertising, repairs and utilities, but these deductions cannot be made until your business has officially gotten off the ground. Not many small business owners know that they can actually deduct the costs of starting the business as capital expenses.
Not many people expect to make a lot of profit in the first few years, so these deductions can come in very handy in offsetting the costs of turning your business into a profitable one over time.
Transportation
If your car and getting around with it are both vital aspects of your business, you will be able to write some of these expenses off. However, the rules for deducting these expenses are pretty complicated, so you might have to bring in an expert to help you out.
You can either keep meticulous records of how much you have traveled specifically for business and add all of those gas and toll expenses up, or you can operate according to the standard mileage rate method, which allow you to deduct a set amount of money per business mile driven. If you are able to have one car that is used for nothing but business purposed, it will make these deductions much easier to calculate.
Entertaining Clients
Money spent to welcome or entertain potential clients can also be deducted. If you are going out with customers or clients for lunch and you pick up the tab, you will be able to deduct a certain percentage of the bill. Also, if you are throwing some type of party or holding a reception or banquet for business purposes, you can also deduct some of these costs. These events need to be help directly before or after some type of business discussion or negotiation, and it is very important to keep very detailed notes here as well of why you organized the function and how much you spent on it.
Equipment
In most cases, business owners can write off the entire cost of new equipment that was bought during the fiscal year. You will not get the money back all that once, but you will be able to deduct the cost over the course of several years. There is also a pretty excellent first-year bonus depreciation that will save you a good chunk of change.
Travel
Just about all of your business travelling expenses can be deducted, but you need to keep good records. You can deduct plane fares, taxi fares, lodging, meals, tips, telephone calls – just about anything that you spend money on when you are on a business trip.
People who run their own businesses might not have that much off time so they often try to combine business and family trips. If you are doing this, you should know that you will only be able to deduct your expenses, not the expenses of the whole family.
There are many more things that you can get tax deductions for as a small business owner, your job is to do the research, look into these opportunities and then take advantage of them as much as possible.
About the Author: Cindy Pearson is a blogger at the PDF Converter blog. She loves all things Internet and technology-related and enjoys sharing handy tips and tricks with other Internet enthusiasts.