How Small Business Can Use Tax Deductions
When you’re running a small business, one of the best ways to save money is to take advantage of tax deductions available to you. Here are some to look into.
1. Home Office Space
If you’re running your startup out of your home, you can usually write off your workspace as long as you use it exclusively for your business. The IRS has made adjustments so that it’s easier to calculate how much you can deduct, but you need to make sure that you’re fully meeting all of their criteria for this write-off so that you don’t run into any trouble down the road.
2. Transportation Expenses
Similar to using a space in your home, if you use your personal car for business purposes, you can write off some of these expenses. From repairs and gas to tolls and parking fees, you can get tax deductions on all of these costs. You can do this by using the actual expense method, which means you keep track of all of the costs you incur while conducting your business, or by using the standard mileage rate method, where you deduct a certain amount for each mile you drive.
3. Startup Costs
A certain amount of the expenses that come with the first year starting your business are tax deductible, usually up to about $5,000-$10,000 total. These are costs that every small business owner has, so make sure you take full advantage of this opportunity to save some money.
4. Health Care
One of the complications that comes with starting your own business is finding an affordable healthcare plan for you and your family. The good news is that these costs are tax deductible, though. If you have an individual policy in your name or your business’s name, the cost of your and your family’s premiums can be deducted, as well as some out-of-pocket expenses.
5. Business Trips
If you take a trip on behalf of your small business, you can write off many of those costs. Your transportation and hotel expenses, as well as some of your meals, are typically covered. The line between professional and personal in this area can get blurry, though, so make sure you’re keeping careful records and only pursuing deductions for costs that you are sure are 100% business-related.
Tax deductions can be a great way to save money for your startup. Look into these options and take advantage of them, but be sure to stay well within the IRS’s requirements. A little money saved now is not worth the consequences that may come in the future for being dishonest with these expenses.