Come tax season and you are spun into the wallet-draining tax payment process. If you are the owner of a small business or work as a freelancer, the tax season might be your worst fear. But what most small business owners are unaware of is the loop holes in the tax system called tax deductions. You might already be paying for a number of these items that are considered a part of your taxable income. So how do you transform these expenses into tax deductions? Read on for a full-fledged guide on the same.
No matter if you own a small business or are an entrepreneur, whatever is your income, you are bound to spend an amount called taxable income which is calculated based on the guidelines of the Internal Revenue Service (IRS). Most business owners escape from a substantial part of this amount with valid expenses which are termed tax deductions, also based on the criteria set by the IRS. Once these expenses are claimed, you can save a good amount on your taxable income. This means you can save on your income by reducing the taxes you pay to the government. Sounds interesting? Read further for more info on how to gain maximum tax deductions for your small business within legal boundaries.
The first rule is, never ignore the rules set by the IRS. People often opt for cheating on the government and claim false expenses in the name of tax deductions. But what I tell you is that, you don’t need to cheat, because you might already be paying for expenses that come under the tax deduction criteria as set by the IRS. But what tax payers don’t know is that even though the citizens of U.S. come under one of the world’s most rigid tax systems, they still are under the safest shelter with regards to tax deductions. Most entrepreneurs go wrong in their expense divisions not knowing that a little tactfulness could save them from huge taxable income. And how is this possible? To know how to make the best of this tax shelter, you need to learn about the basics of tax liable amenities, tax deductible expenses and implement a tax monitoring system in your business. This way you can take advantage of the existing tax system and save yourself a huge amount on your yearly income.
Most Overlooked Business Expenses
- Marketing and promotional expenses
- Losses dues to theft
- Dues in business associations
- Information technology related expenses
- Food and beverages served at business meetings
- Consultant service fee
- Office stationary and other supplies
- Commission payments
- Charges related to bank’s services
- Parking facility expenses
- Audio and Video tapes for business skill training
- Other funds
Did you know advertising is a business deduction? Yes, it is and it can include anything done to earn new business or increase in sale.
A few examples of deductible advertising expenses:
- Purchased email lists for sales.
- Manufacturing expenses of promotional items such as pens, calculators, and notepads.
- Printing costs for banners.
- Online advertising or website costs.