You’ll obviously know that there are certain deductions your business can claim for, and reduce the overall amount of tax they legally have to pay. If you’re relying on your own books or using accounting software, then you’ll probably be claiming for the most obvious deductions available to businesses like yours. However, are reaping all the savings you possibly can? Millions of business owners and individuals overlook certain deductions every year according to the IRS. Here are some you should never forget.
Petty cash expenses are the little things in life, that you pay for with… well, petty cash! The all-important coffee and donuts for office meetings, along with things like parking and bridge tolls, are all a part of this category. Keeping track of these seemingly tiny expenses can add up to some seriously big savings in the long run, so make sure you’re not overlooking them.
If you use a car for any tasks related to your business, you can legally deduct the expenses you need to pay to keep it on the road. To claim this, however, you need to be keeping a detailed and contemporaneous log of gas, maintenance, and any other expenses you need to use your car, along with the business applications you’re using it for.
The Cost of Preparing Documents
You can also claim deductions for the preparation expenses tied to preparing a business plan, loan application and so forth. If you need a loan to get your business off the ground, or you hire an accountant or attorney to prepare some kind of business documentation, you can deduct the expenses you incurred, even if you didn’t get a loan approved. This is something countless business owners ignore until they opt for tax relief consultation. Make sure you’re not one of them!
Experimental and Research Costs
Companies in certain niches will have to organize extensive research and experimentation to develop new products. The cost of this research and experimentation might be deductible if you choose not to list them as capital expenses. Just make sure you do your homework for this particular deduction, as there are a lot of qualifying criteria and restrictions tied to it.
If you have to make any improvements or remodeling work to your business premises in order to accommodate for disabled customers or employees, then this can also be taken off the final figure of your taxes. That is, some of it; the annual limit on these deductions is $15,000.
Start-up and Organization Costs
This is the one sure thing that small business owners should never forget to deduct, and yet one of the main ones that many of them do. Depending on everything you need to source to get your business up and running, you may be eligible to deduct some of your start-up costs up to $5,000. If, however, your start-up or organizational costs exceed $50,000, then your deduction may be severely limited.
If you’ve been smacking your head at these deductions, keep them in mind when tax season rolls around!