Find Some Often Overlooked Tax Deductions For Your Small Business
You need year round planning to take advantage of your deductions in tax season This means you need to keep the upcoming tax season in mind at all times. And constantly look for ways to decrease your bottom line while also making your company more profitable.
Start-Up Expenses
One of the most commonly overlooked expenses for a small businesses is the expense of going into business. Capital expenses. This means the money used to pay for marketing, overhead and other related expenses. These must be deducted over the first five years you are in business. And keep in mind that these write-offs cannot be deducted before your doors are open and cash is beginning to flow through your business.
Continuing Education And Training
Do you attend conferences, continuing education classes, or another type of course related to your current busines? Any education related to your current business, can be deducted. For instance, a veterinarian specializing in equine medicine can deduct the costs of attending a conference on new cancer treatments in horses. Because this course is related to the veterinarian’s field, the seminar is deductible from yearly taxes. However, if the veterinarian specialized in small and domestic animals, the conference would not be deductible. There are strict rules to follow about which types of classes actually qualify for deductions. So ask your tax professional to be sure.
Professional Service Fees
The fees charged by your accountant to do your taxes, are actually tax deductible. Yaayy! Because sometimes these can really add up. The only rule for this deduction is that if the work being done relates to future years, the deduction must be taken over the complete term of the benefit. An example of this would be hiring an architect to help design a building that will take two years to construct. The fees for the architect must be spread over the two years in which the building is actually being constructed.
Bad Debts
If you are in the business of selling goods, and a customer doesnít pay you for the goods you sold them, that debt is deductible. However, businesses that provide services instead of goods cannot take this type of deduction because it would be difficult for the IRS to prove a bill was not ìinflatedî for services provided in order to claim larger deductions for the bad debts.
Other Deductible Expenses
There may be other expenses that are tax deductible in your business. You can start by referring to the IRC ß 162, which outlines different trade and business expenses. This section of the Internal Revenue Code is the basis for determining whether or not a taxable expense is deductible. If the wording is confusing, take the code to your tax accountant along with the expenses you are questioning. Your tax accountant will be able to point you in the right direction and clear up any confusion.
Don’t guess about your small business deductions. Ask your tax accountant to be sure you’re handling every deductible properly on your small business tax return.
