Find out what you can and what you cannot deduct..
New Year 2017 has just begun. It does not only mean a new beginning; it also marks the Tax Tips For Small Business Owners season. It’s about time you started prepping your files. We know at this point in time you will be handling plethora of papers and bills. It can get over the top to handle both business bills as well as personal ones. You might also be simultaneously wondering what can get you some savings through tax deductions and what can’t?
1. Office at home
Many small business owners out there do not claim their “home office” deductions, for they fear the auditing involved. This fear should not cease you from claiming what is legitimate. Ensure that you have all the supporting papers, and you are able to prove that all the expenditure mentioned are for your business and you will do just fine. Everything you need to know about home offices:
- Ensure that you have a distinct office area besides the living area and the office space is not used for personal stuff.
- Owning and claiming only one computer that you have at home as your business computer can be very difficult. Either don’t claim the computer as a business property or don’t place it in the office area.
- Calculate what percentage of the home area goes to office space and claim the rent & other bills in the said area and nothing more.
2. Purchase of technology
Striving and thriving businesses need to stay up-to-date with the contemporary tools and technology pertaining to the business. Section 179 under the tax code allows you tax exempt on gadgets like printers, computers, and up to some amount business vehicles are tax exempt. Not only gadgets, software and subscriptions to articles, newsletters, etc. Pertaining to your business also give you the tax exemption. All you need to do is know the amount that can be deducted as it changes yearly. Therefore, do not hesitate to invest in the technology you need for your business.
3. Cost of travelling
Some small businesses involve a lot of travelling which means a lot of expenses. Since this travelling is required for the business expansion, one cannot avoid that. Little do people know that this travelling expense is tax deductible. This exemption writes off the expenses including airfare, hotel, car rentals and mileage, other expenses like laundry, and fifty percent of the food costs. Bear these points in mind before adding your travelling expenses for deduction:
- You can always take your family on your business trip, but only the business-related travel and other costs can be deducted.
- You get a 50% deduction for meals you treat your clients. Just ensure that you name the bill, so it doesn’t get lost among your sea of other personal bills.
- Tax deductions also include conference fees as long as they are useful for your business directly. Note that conferences that yields a side income, lectures, and other events that are based on entertainment will not qualify for tax deductions.