When tax season rolls around, you’ll want to be sure you’re deducting every possible expense for your business to minimize the amount of tax debt you owe the government. This means itemizing everything you spend company funds on and claiming it on your taxes. Here are five business tax deductions you don’t want to forget to take this year.
- Vehicle Expenses
If you have company vehicles that needed repaired, gasoline put in their tanks, or any other expenses associated with their maintenance, you can deduct the cost(s) from your tax return. This is especially useful for companies with large fleets of vehicles, as any and all expenses associated with their maintenance can make for a huge tax break.
Of course, you can only benefit from this tax break if you’re carefully documenting any and all expenses. Be sure to save gasoline receipts, repair invoices, etc., in a secure location where you can access them during tax time. Should your business ever be audited, the IRS may want to see proof of these costs, and without those receipts, you can’t exactly prove you spent the money where you say you did.
It’s good practice when you’re in business to simply save all receipts; no matter how seemingly trivial it is. If you used the company funds to purchase something for the business, save the receipt or invoice.
If you’re paying monthly rent or mortgage on a property where your business operates, you can deduct the cost from your taxes. Rent can be a huge expense, especially if you’re running a large production facility that requires more than a few thousand square feet. Deducting this from your taxes will help you save money in the long run and make that expensive rent payment worth it.
If you’re only running a small, few-hundred square-foot office space, you still want to deduct that cost from your taxes. Sure, you won’t get a deduction as large as the guy with an entire factory to deduct, but every bit helps and you don’t want to miss any chances to reduce your tax debt to the government.
Water, gas, electric; these are all items you can deduct from your business taxes. If you run a large facility that uses a lot of water and power, being able to deduct those costly necessities is incredibly helpful to your overall financial picture. Utilities can add up quickly, especially during the winter (those heating bills certainly aren’t dropping in cost).
Of course, even though you can deduct these expenses from your taxes, that doesn’t mean you shouldn’t work to reduce their overall monthly costs. Be sure your business is insulated, so hot and cold air both stay inside the building and keep your temperature control costs low.
You can also choose a different provider for your electric and gas. This could potentially lower your monthly costs by providing you with a cheaper utility provider while still maintaining the level of service you’ve come to expect.
- Materials and Subscriptions
The materials you use to create your products can be deducted as well; as can monthly subscriptions. If you pay monthly (or annually) for something like a web conferencing tool, you can deduct this from your expenses. Any kind of monthly subscription that helps run your business counts as an expense and can be deducted.
Materials should always be on your list of deductions. You likely spend thousands per year on the materials it takes to create your products, so why shouldn’t you recover some of the cost? Keep detailed records of your purchases, so you can deduct as much as possible and recover more of your costs.
Don’t forget materials such as office supplies. Ink, toner, paper, and other supplies for the office printer can add up quickly and be deducted; as can things like pens, computers, etc. Your office is full of supplies that help it function on a daily basis. Don’t forget about these minor expenses when you’re deducting!
- Legal or Financial Services
If you had legal fees, paid for financial services like a financial advisor, or needed an attorney for a lawsuit against you, you can deduct the costs of these services. Sometimes unexpected legal troubles arise, and you need representation. If you’ve ever had to hire an attorney, you’ll know that it’s certainly not cheap to do so. Recovering some of the cost will help lessen the additional financial blow that comes with being taken to court.
Hiring financial services for your business is also something you can deduct. If you hired a financial advisor () to help get your finances back on track, be sure to save the invoice so you can deduct the cost later on.
Deducting expenses is a way for you to recover some of the costs associated with running your business throughout the year. It’s important to save every receipt or invoice somewhere (and also back it up to cloud storage) for easy access. You’ll want to document expenses down to the last penny, not only to get maximum deductions, but to also get a clearer picture of where your money goes each month. You may find that you have more unnecessary expenses than you thought. Don’t leave your finances to chance; document everything.
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Founder Dinis Guarda
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