You opened up your new business. You’re working hard to get organized, manage your team, and deliver exceptional services to your clients. Taxes are the last thing on your mind. One tax item you can take control of now, though, is managing your tax deductions.
As a new business owner, you can deduct taxes. In fact, I have more than a few entrepreneur clients who tell me, ‘I didn’t know I could deduct that!” or “I wish I knew I could deduct that.” Perhaps the reason for this assumption is because new business owners feel they don’t ‘qualify’ for deductions. Or, most likely, they simply don’t know. Whether new or old, business owners need to keep their taxes in check – and that includes deductions.
Here are 5 tax deductions you should be aware of today:
1) Home office
In order to claim your home office on your taxes, it must be a space devoted to your business and nothing else. It also doesn’t have to be a full room. It could just be a part of a room. Measure your work area, take that measurement along with the square footage your home and you’ll be on your way to claiming a portion of your home expenses on your taxes.
2) Travel, meals, entertainment and gifts
For business travelers: hotel and travel Costs, including air, auto, and rail, are fully deductible. You can even write off tips to the bellboy. 50% of meals and entertainment expenses qualifies as long as a client is with you.
Are you the giving type? Even promotional gifts worth up to $25 per client, per year is deductible.
There are two ways to claim your office furniture purchases:
- Deduct 100% of the cost in the year of the purchase.
- Deduct a portion of the cost over 7 years.
It is nice to have options. A Tax Pro could help you determine which is more beneficial to you.
4) Software and subscriptions
You can absolutely deduct software used in your business in the year purchased. Also, you can claim business-related magazine subscriptions. Not into old-school magazines? Don’t forget that online subscriptions to industry websites count!
If you drive for business, the IRS allows you to claim 53.5 cents per mile (for tax year 2017). Use a notebook to track the date, mileage and purpose of your trip. While you are at it, jot down tolls and parking fees. Just make sure you pull over first!
On a side note, you might be able to claim lease payments or interest paid on an auto loan on a business vehicle as well. Make sure you speak with your tax preparation specialist. He or she will guide you towards the best tax solutions for your business.