There are 10 deductions every small business owner should know. The Internal Revenue Service offers business owners a fair number of small business tax deductions and understanding them will allow you to navigate through the maze of write-offs.
You can deduct up to $5,000 in start-up and $5,000 in organizational costs for the first year of business. Expenses that are not deducted can be amortized over a 180-month period, which begins when you open your business. You can write off or amortize market research, advertising, employee training, business-related travel, legal advising and other costs. 2. Education Deductions
The IRS has very stringent rules for deducting educational expenses. Generally, employers can deduct employee educational expenses if the courses maintain or improve job-related skills, or if employees need the education to continue in their current jobs. If you are self-employed, you can also write off some educational expenses. Transportation to and from the classes may be deductible. You can’t write off any educational expenses that train you in a new field. 3. Vehicle Deductions
Auto deductions are amongst the most inspected and clearly outlined items; so meticulous record keeping is critical. You have the option of deducting mileage or actual expenses such as gasoline and maintenance. 4. Equipment Deductions
All businesses require equipment of some kind. The amount can be deducted all at once in the first year of acquisition (up to a limit of $125,000, as of this writing), or amortized over a number of years. 5. Entertainment deductions
A surf and turf dinner at a fancy restaurant tasty, having the government foot the bill, priceless. Business engagements over dinner or attending a business conference in the Bahamas can be deducted as business expenses, if they meet the necessary requirements. 6. Travel Expenses
Certain expenses like airline tickets, hotel stays, meals and services that were necessary during the course of the business trip can generally be deducted. As a side note, you cant turn it into a family vacation and deduct the cost of bringing the ball and chain. 7. Legal Fees
Spring for the $500 an hour shark in the corner office. Consulting lawyers about business matters or to review contracts can be deductible fees. 8. Advertising Costs
Getting the word out about your new business is the key for staying relevant. Moneys spent on print, billboard, Internet, radio and television advertising can all be write-offs. 9. Software deductions
Need the last version of Quickbooks, or you want specially designed inventory software? The cost of software purchased for exclusive use by the business can be deducted. 10. Charitable Contributions
Thinking of donating to a food drive or funding a dinner for the homeless? Charitable contributions are tax-deductible based on the value of the item(s) given. Donated money can be deducted for the actual amount, but goods may only be deducted for the amount received when they were sold by the charity.
