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Are You Aware Of These Tax-Write Offs?

March 8, 2021 by Carter Leave a Comment

They say paying tax is inevitable. But are you aware that there are deductions and exemptions small business startups can enjoy? Business owners can reduce their income tax bills by claiming some deductions relevant to the kind of work.

Small Business Tax Deductions for 2020 business owners can maximize mandatory payments, making a huge difference between an outrageous tax bill and a fat refund check. For most small and medium businesses, the local running and standard deduction are a priority.

However, there are some expenses that one can leverage to lessen the tax burden when the tax-man comes knocking. Seize the moment and read on to equip yourself with the right information before the next tax-return season.

Work-Related Car Use

If you use your car to run business errands, then, you can write off all the operating and maintenance cost that goes with it. If you use it strictly for business, you can claim every penny you use. On the other side, if you use it partially for family and business, you can claim deduction costs that fall under the company.

You can get tax relief by claiming the mileage used for business driving. You can use the standard mileage deduction provisions for your region or deduct the miles covered for business travel.

Work-Related Travel Expenses

All travel-related costs and tickets can be written off during tax return exercise. This includes bus tickets, air-travel, meals, tips, taxi and car-hire services costs, dry cleaning expenses, and more.

To enjoy work-related tax deductions, you must meet the following conditions:

  • The business trip must be business-oriented
  • The trip must have taken you outside the business location area
  • You must have traveled for more than a day to warrant you to spend the nights in a hotel or take a rest en route.

Business Meals

A start up business can enjoy up to 50% of food and beverages that qualify. To get tax relief the meals must be related to the company. You must also demand and keep the following documentation to verify the expenses:

  • Date and location you took the meals
  • The business relationship of the persons you dined with
  • Total costs of the food and beverages used

So be keen to keep all the receipts and write down other details at the back of the receipts to capture the other details.

Phone and Internet Expenses

If your business needs you to use the internet and call services, you qualify for tax deductions. However, if you use it both for personal and business engagements, you can claim the percentage that goes to the business.

Bank Fees and Business Interests

When you borrow a bank loan to fund your business, it extends an interest on that loan. You can claim a tax deduction when doing your tax returns: both for your business cards and the loans.

If there are any additional fees on your business credit cards and business bank account, you can have them written off. These include annual business card charges and monthly service fees.

Depreciation

Deducting depreciation, you write a write-off of a significant ticket item such as machinery or a car over the gainful lifetime of that item, rather than deducting it all at one in one tax season.

It is advisable to calculate deductions for the most expensive long-term business investments, to get a reimbursement for that expense over the asset’s useful life time.

Professional Service Fee

Most businesses procure professional services such as accounting, bookkeeping services, and legal. These are expenses that warrant tax deductions. This is also the case for any business using bookkeeping and accounting software.

Sometimes, it can be challenging to determine if an expense is personal or business-oriented. If this is the case, you can seek help from your local taxman for guidelines for legal and professional charges.

Salaries and Benefits

If you run a small business with few employees on the payroll, you can write off their vacations, benefits, and salaries on the business tax returns. Consider the following requirement when writing off wages and other benefits for your team:

  • The employee should not be a sole proprietor or a partner in the business.
  • The salary should be a reasonable amount.
  • The employee rendered the services to the business.

Self-improvement Courses

If you attend workshops, seminars, webinars or any educational forum that seeks to benefit your firm, it qualifies for deductibles for taxation reasons. It also includes any course you attend to maintain professional license, trade association fees and credentials. Publications and subscriptions related to your business also qualify for deductions.

 

Filed Under: Business

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Neighborgoods is all about living a healthy and community based lifestyle. Staying active and being outdoors is what life is all about :) It may not be for everyone, but I believe that the more time we spend with others being active outdoors, the happier we are.

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