Have you always dreamed of opening a bakery or a neighborhood bookstore? Perhaps, you’d like to earn a little extra money after you retire by setting up a consulting business? Such ventures can help you save a little money at tax time, if you know what deductions you can take. Remember, of course, to keep detailed records and receipts, just in case the IRS ever requests an audit.
Don’t overlook these tax deductions for small businesses
Owning a small business gives you the opportunity to deduct a wide range of expenses related to running the company. Just a few of the most common tax deductions for businesses include:
- Mileage and auto expenses. If you use your own vehicle for business purposes, you can either deduct the exact cost of the gas and maintenance or you can keep a log book of the miles you drive for the business and take the standard IRS mileage allowance. Business driving can include such things as visiting a client, picking up office supplies, delivering a product to a customer or taking mail to the postage office. Don’t forget to save receipts for parking and tolls. These are deductible, too.
- Entertainment. Business meals, travel costs and related expenses are deductible if you keep detailed records and receipts about whom you entertained or the purpose of your trip, the location and the date. Meals that you buy for customers or clients are only 50 percent deductible.
- Association dues. Do you belong to the Better Business Bureau, the local Chamber of Commerce or other professional association? The cost of joining these organizations is tax deductible.
- Home offices. If you have a dedicated spot in your home that’s used exclusively for your business, the IRS lets you deduct a portion of your rent/mortgage, utilities, insurance, security system, cleaning and other household expenses.
These are just a few guidelines for small business tax deductions. It’s wise to consult with an accountant before filing your tax returns.
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