Friday , 21 July 2017
Breaking News
Home » Finance » Despite Their Money-Saving Potential, Many Business Owners Fail to Claim These Nine Tax Deductions

Despite Their Money-Saving Potential, Many Business Owners Fail to Claim These Nine Tax Deductions

The reason corporate conglomerates are corporate conglomerates is because they save money wherever they can. The more money they save, the more money they can put back into their business. The largest U.S. businesses hire accountants to get them as many tax breaks as they can; after all, giving money to Uncle Sam is not profitable. Even small business owners can take advantage of tax deductions. The problem is many don’t. Here are common deductions missed each year.

 

1. Home Office

 

According to American Express, only 7.6 million of the 23.4 million sole proprietors claimed the home office deduction in 2011. AmEx believes the reason why is because many people fear the IRS will audit them, but this isn’t true. The IRS does not penalize sole-proprietors for taking it if they are so entitled.

 

2. Business Start-Up Costs

 

It cost you money to open up your business, and you can claim this as a tax deduction. Currently, the maximum amount you can deduct is $5,000, but make certain you double-check that figure before filing your taxes. IRS Publication 535 will help you determine the number of start-up costs you can claim.

 

3. Office Supplies and Inventory

 

Don’t forget to deduct the supplies you use to run your office and, as many learn in Villanova’s online master of law in taxation program, small businesses who earn less than $10 million in profits over three years can use the cash accounting method and consider their inventory as supplies, as well.

 

4. Speaking of Accountants…

 

If you pay someone to do your taxes rather than file them yourself, make certain to deduct the accounting fees the following year. This is an allowable expense, according to the IRS, and even a nominal amount can make a difference to your tax bottom line.

 

5. Consider Bad Debt

 

While working on your taxes with your accountant, discuss with him or her any outstanding debt owed to you. For example, assume you lent a business associate money. The business associate has disappeared and you will likely never see the money. Your loan may be deductible.

 

6. Your Business Bank Account Fees

 

It’s always important to separate your personal finances from your business finances, even if you are a sole proprietor. As such, you should have a separate business bank account. Make certain you deduct all of the bank fees assessed from your business taxes, including ATM fees.

 

7. Deductions From Last Year

 

Certain business tax deductions are called “carryovers” because you may not have been able to claim them in the previous year, but you may be able to claim them now. Expenses that may qualify as a carryover include capital losses, charitable contributions, and passive activity losses.

 

8. Health Insurance Benefits

 

Whether for you, your spouse, and your dependents, you can claim your health insurance premiums on your personal taxes – not business – if you are self-employed or running an S Corporation. You must own more than 2 percent of the S-Corp for this deduction to apply, so make certain you qualify.

 

9. Loan and Credit Interest

 

Finally, if somebody owes you money, you may be able to deduct it; if you owe somebody else money, you may be able to deduct the premiums. Talk with your accountant about deducting the interest payments on all of your business credit cards and loans to see if you can do so.

 

Do not miss any of these business tax deductions when you submit your annual filings to the federal government. Even if you aren’t a corporate conglomerate, you must think one. Save profits where you can, including when its tax time. The less money you pay Uncle Sam, the more money you can put into your business.

About Emma G.

Working in the marketing industry since 2002. This blog is one of my hobbies.

Leave a Reply