You can save a ton of money on tax write-offs if you’re running your own business. For many small businesses, taxes are one of their larger expenses, sometimes even their largest expense. Are you aware of all the write-offs you can use to reduce this expense?
=> Examples of Write-Offs
* Home office space – You can’t claim your entire house as a deduction, but if you have a specific room or area of the house that’s a home office, you can claim that space as a tax write-off. Just figure out the percentage of the square footage in your home that your office space takes up and divide your monthly rent or mortgage by that amount.
* Health insurance, social security and retirement plans – Your health insurance is most likely completely tax deductible. You may also qualify for tax breaks depending on your retirement plan. You can deduct 50% of your social security taxes if you’re self-employed.
* Internet and phone – If an internet connection is required for business operation, chances are you can deduct it. The same can be said for your phone. You can’t deduct your primary line, but if you have additional lines specifically for business it can probably be deducted.
* Filing fees – In most states, you have to pay some sort of filing fee to maintain your corporate or business license. These fees can almost always be deducted.
* Any office supplies – Staplers, paper, pens, paper, etc. can almost always be deducted.
* Computers, printers and scanners – So long as the digital equipment is used primarily for business, you can probably deduct it.
* Domain, hosting, shopping cart, etc. – Any expense that you incur as a result of having your website up can be deducted.
* Meals – You can deduct 50% of your business meals. What is a “business meal?” A business meal is basically a meal you have with one or more persons who are in some way related to your business.
=> Best Practices for Recording Tax Write-Offs
Save all your receipts. If it’s not self-explanatory what the receipt was for, make notes on the back of the receipt so that when tax day comes it’s clear to you or your accountant what the expense was.
If you’re deducting a meal, make sure you write down who the meal was with on the back of the receipt as well.
In general, if it’s an ordinary expense, you won’t raise any red flags at the IRS. On the other hand, if you start creatively deducting things that generally aren’t considered business expenses, you risk getting audited.
If you keep good records and keep abreast on what your write-offs are, you can greatly reduce the amount of taxes you need to pay at the end of the year.