Don't Leave Money on the Table: Commonly Missed Tax Deductions for Small Businesses
Being a small business owner means that you wear many hats and have numerous responsibilities on your plate. One of those responsibilities is filing your business taxes, which is a daunting task for many entrepreneurs. While most business owners aim to do everything right when it comes to taxes, they can easily overlook common tax deductions that could save them hundreds or even thousands of dollars.
In this blog post, I will dive into some of the commonly missed tax deductions for small businesses. By taking advantage of these deductions, you can reduce your taxable income, maximise your refund and ultimately contribute to the growth of your business.
Home office expenses
If you are running your business from home, you are eligible to claim a home office deduction. This deduction can cover a portion of your rent or mortgage interest, utilities, and insurance. You need to ensure that your home office is exclusively used for your business, and you must have a dedicated space that's separate from the rest of your home.
Vehicle expenses
Another frequently missed deduction is the vehicle expense deduction. If you use your vehicle for business purposes, such as meeting clients, travelling to work, or delivering products, you can claim this deduction. You can either deduct the actual expenses for operating your vehicle, such as gas, repairs, and maintenance or opt to use the standard mileage rate. Be sure to keep a detailed record of all your business-related vehicle expenditures.
Education and training
If you attend seminars, workshops, or training courses to improve your skills or knowledge for your business, you can claim a tax deduction for these expenses. You can also claim a deduction for books, online courses, and other educational materials that you purchase for your business.
Charitable Contributions
If your small business has made charitable contributions, you are entitled to a tax deduction. You can deduct cash donations or the value of property (such as inventory) donated. To claim the deduction, individuals should document the contribution with a receipt from the charity.
Business Travel Expenses
Travel expenses can add up quickly when you're running a business, but they can also be deducted from your taxes. As long as your travel was primarily for business purposes, you can write off expenses like airfare, hotel fees, meals, and rental cars. Keep detailed records of your travel expenses, including receipts and an itinerary, to substantiate your deduction.
As you can see, there are many tax deductions available for small businesses. While it's important to accurately file your taxes, it's equally important to take advantage of all deductions that are available to you. By doing so, you can reduce your taxable income, maximise your refund and ultimately contribute to the growth of your business.
In summary, keep good financial records throughout the year, work with a qualified accountant and consider implementing an accounting system to help you maximise all of the tax deductions available to you. By doing so, you'll be able to avoid leaving any money on the table when it comes to your business taxes.