3 Little Known Tax Write-Offs for Your Small Business
There are tons of expenses that can eat into the profits of small business owners. If you don’t track them, they can leave you with a bigger bill to Uncle Sam without the tax write-offs you could be using.
You can reduce the amount you owe with the help of a “write-off” – an expense that you can deduct from your business’s income tax returns. This takes down the amount of income business owners have to pay and preserves profits.
Vehicle Expenses
Vehicle expenses may seem a bit tricky because you usually use your car for both personal and business reasons. You just have to keep really good records of when you use your car for personal purposes and business.
Use a smartphone app like Everlance to automatically track your miles and log your expenses.
When tax time comes, you can deduct expenses by using the IRS standard mileage rate or by the actual expenses (tolls, car maintenance, gasoline, parking). So, if you are constantly traveling by your car or using it for deliveries in your business, track the mileage and how it compares to the actual expenses.
Business Credit Card Processing Fees
Credit card processing fees is one little thought of tax write-off. If your business accepts credit cards and gets tackled with credit card processing fees, you can deduct those transaction fees from your business. Those payments can really add up and hurt your profits.
You can also write-off any expenses from your business credit cards, including annual fees, and late payment penalties.
Charitable Donations
Charitable write-offs not only include monetary donations, but also any supplies or property given to a recognized charity.
What qualifies for charitable giving includes cash donations, property such as inventory, equipment, or vehicles, and sponsorship of local charity events.
It should be noted that you cannot donate your time as a tax deduction i.e. if you help a charity and typically charge $150 an hour, you cannot write off your served time.
There are a ton of expenses that can eat into your profits and if you do not track them, they can leave you with a bigger tax bill. So, stop paying more taxes than you need to. Talk to an accountant or tax specialist about the other deductions you can make to lower what you owe at the end of the year.