Small Business Tax Write-Offs
Written by Eddy Hood
Tax season is a stressful time for any owner of a small business. Tax write-offs offer a way to save money, but many people are overwhelmed with the rules and legal language surrounding them. Because owners are often rushed through the accounting process, appropriate deductions are sometimes missed. Here are some common small business tax write-offs that owners often forget about:
- Employees’ Pay and Benefits: Don’t forget that the pay you give to your employees is tax-deductible, according to the IRS. Retirement plans, pensions, and other employee benefits are also deductible.
- Marketing Costs: You can write off marketing costs as long as they’re immediately related to your small business. Write-offs include promotional costs and advertising costs. That includes everything from business cards to radio spots to local sport team sponsorship.
- Charitable Donations: As with personal tax write-offs, small businesses can deduct charitable contributions of more than $250 to 501(c) nonprofit organizations. Be sure to get a written letter or a receipt for your contribution.
- Software: Many people believe that software needs to come in a physical box if it is to be tax-deductible. Subscriptions to online SaaS software are deductible as well (as long as it’s relevant to your business).
- Rent: You probably pay a lot for your small-business space. If you don’t own the building you’re in, you can deduct the rent.
- Professional Fees: Freelancers’, lawyers’, contractors’, accountants’, and consultants’ fees are often deductible.
- Insurance: Deduct the premiums you pay for liability, credit, and much more. The insurance must be “ordinary and necessary” for your trade.
- Office Supplies: Equipment like printers and computers, furniture like office desks, and supplies like pens can all be itemized; keep those receipts. Note that big purchases may need to be claimed in chunks over several years.
- Debt: Yes, even bad debts can be claimed as tax write-offs! For small-business owners who sell goods or services, this can be helpful when goods are sold or services are rendered and payment is never received.
- Professional Education: If you invest in having your employees attend industry-related seminars, trade shows, or lectures, you can deduct these expenses as well.
- Travel: A lot of people unnecessarily worry about this one. If you’re traveling exclusively for business, it can be deducted. That includes airfare, hotel, taxis, meals, and even car maintenance. The rules only become complicated when business and pleasure are mixed. In cases like these, feel free to seek advice from a professional accountant.
These are just a few samples of the many different deductions available to small-business owners. It’s important to not be overzealous when writing off expenses; the IRS can come down hard should you itemize the wrong tax write-offs. For small-business tax form completion, an owner should always have the advice of a trusted accountant like those here at Ignite Spot. If you’re unsure about which small business write-offs are legitimate and which aren’t, feel free to contact us. We can offer tax bookkeeping services online, and our outsourced accounting firm is highly experienced in working with small businesses across the country. Download our pricing guide to learn more. Feel free to ask us about a free tax planning session with our CFO.
Learn More About Our Tax Services
- What is the Federal Unemployment Tax Act (FUTA)?
- Understanding Self Employment Taxes
- How to File Self Employment Taxes
- Tax Implications of The Affordable Care Act on Small Businesses
- The Guide to Small Business Tax Preparation and Deductions
- How to File Small Businesss Taxes
- Self Employment Tax Deductions
- What is a Tax Write-Off?