Five Small Business Tax Deductions
Small businesses are not only interested in finding ways to make money, they are also interested in finding ways to save money. Tax deductions fall into the latter category by helping small businesses decrease their taxable income, thereby enabling them to hold onto more of the money that the business has earned. An easy way to reduce your tax bill is to ensure you’re claiming all of the deductions available to your company. While understanding which small business tax deductions you can claim will help your bottom line, identifying them isn’t necessarily easy. In its 2017 Small Business Taxation Survey, the National Small Business Association (NSBA) stated that the stress and frustration associated with filing federal income taxes was one of the top concerns among small business owners.
When preparing to file your small business tax return, it’s always a good idea to have an in-depth conversation with a tax expert to make sure you are receiving all of the deductions to which you are entitled. For example, following are five often overlooked tax deductions for small businesses.
Marketing. Many companies, large and small, spend significant amounts of money on marketing and advertising—a tax break that is often missed by small businesses. Going beyond print, television and digital media advertising, other business marketing expenses like brochures, flyers, business cards and even product display racks can all be deducted.
Vehicles. The expenses associated with your small business vehicle are frequently missed deductions. Operating costs such as fuel, parking fees, and tolls are deductible, along with maintenance and service fees. Depreciation on small business vehicles can be deducted, as well.
Rented business equipment. Any equipment that a business rents, such as machinery, structures, storage facilities, and general equipment, can be deducted.
Charitable deductions. Small businesses often do not account for all of their tax-deductible charitable contributions. Some are fairly straightforward, like a company check written directly to a charity. Others, like smaller, out-of-pocket donation expenses can be missed. Things like furniture or electronic equipment and devices that are donated to a charity can be deducted. Make sure your small business is capturing the little donations, as well as the big ones.
Software. A relatively new tax deduction of which many small businesses may not be taking advantage is for software purchases. If your business purchases off-the-shelf software for accounting, inventory management or other direct business uses, the purchase price of the software can be deducted. The stipulation here is that the purchased software must be used directly for the business and that the product is publically available for purchase and not custom made.
Check with your accountant and review your business operations and inventory of expenses to make sure you are receiving all of the tax deductions your company is due. To learn about more ways to help your small business grow – from SBA loans to equipment leases, financial planning, and ways to optimize your business cash flow – contact PlainsCapital Bank and speak with one of our small business professionals.