Forgotten Small Business Tax Write-Offs (Infographic)

Forgotten Small Business Tax Write-Offs 1200 x 1200Our friends at Fresh Books, the leader in cloud-based accounting, shared their infographic on 8 Often Forgotten Small Business Tax Write-Offs. Whether you prepare your own taxes or hire an accountant, maximizing your tax deductions (aka. write-offs) will ultimately reduce your tax bill.

These wouldn’t necessarily be my top 8, but they are useful nonetheless. Below are my top 3. Scroll down to see the Fresh Books infographic. Please comment below and let me know what you think.

Top 3 Small Business Tax Deductions:

office-1078869_6401. Home Office Deduction – This one scares people the most because of the perception that it’s a big red flag for the IRS. Although, this may have been the case in the past, consider that most small businesses now are home-based businesses. Furthermore, the IRS has created a new, simplified home office deduction method, which began in 2013. To take the home office deduction, you must use your home office regularly and exclusively for your business and it must be your principal place of business. If the space is also used for personal activities, then it would not qualify.

2. Auto Expenses – If you use your car for your business, you can deduct some of the costs. Only the business percentage is deductible, so personal use needs to be factored out. There are two methods for claiming the deduction; actual expense method, and standard mileage rate method. For simplicity sake, the standard mileage rate method is easiest to track and compute. You would need to monitor and record your total vehicle miles for the year, breaking down the business and personal usage. The information needs to be recorded and logged, but don’t worry… there are plenty of apps for that.

business-891339_6403. Start-Up Costs – Before you actually opened your new business, costs incurred in researching, developing and setting up your prospective business are deductible with limitations. You can deduct up to $5,000 in the first year of business. Anything over $5,000 would need to be expensed evenly over 15 years. Special limitations apply if these costs exceed $50,000.

8 Often Forgotten Small Business Tax Write-Offs:

 

The information presented in the above article is general in nature, and not warranted or guaranteed. Your situation is specific to you alone, so be sure to speak with a Certified Public Accountant or a trusted tax advisor to discuss your specific situation.

Did you find this post on Forgotten Small Business Tax Write-Offs, useful?  If so, I would greatly appreciate if you shared and commented below.

Noel B. Lorenzana - C.P.A., Often Forgotten Small Business Tax Write-Offs

Sincerely,

Noel B. Lorenzana


Email: noel.b.lorenzana@gmail.com

Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, I would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

4 Comments

  1. Chime lhatso on March 25, 2016 at 12:52 AM

    Well written and interesting ☺️

  2. Mariah on March 24, 2016 at 10:40 PM

    This is great! Being a small business owner, this is the kind of info I look for!

  3. Mei on March 24, 2016 at 3:42 PM

    When I got to the part where you mentioned Corey and the shinny oil, I couldn’t stop but laugh. It made me think of various lawsuits that people started up.
    As for the article itself, it seems to be quite comprehensible. (Me no like taxes. >.<)

    • Noel B. Lorenzana on April 13, 2016 at 5:57 AM

      Thanks Mei! I’m glad you enjoyed the article. Most people don’t like taxes except those who do it for a living 😉

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