.When first starting a business, there are many pieces of information. These are helpful to know in order to save on expenses. For small businesses, there are a number of small tax deductions. They exist that will reduce the overall amount of taxes paid. Expenses can be qualified as deductible. If the IRS deems them to be necessary and essential in order for the business to make a profit. By determining expenses that are deductible, the business will owe less in taxes. Hence, it can have more to invest in themselves.
Awareness of deduction rules must be kept up annually. It is because of the constant changes. Knowing which expenses are deductible and which are not are important to know before filing taxes.
Tax Deductions To Remember
Ten important tax deductions to keep in mind include
- Startup costs
- Any other taxes or charitable donations
- Wages and payroll taxes
- Retirement plan contributions
- Bad debt
- Home office
- Health insurance
- Employee training
First, it may be hard for some start-up businesses to understand expenses can be deductible up to a certain amount.
Other taxes, interest, and fees the business will pay can qualify as a business liability and are deductible as well as charitable donations. Remember to claim all employee wages and payroll taxes including yourself as deductions for the business. Contributing to retirement plans also qualify for a deduction and increase savings for retirement. Bad debt can also be claimed as a deduction as long as the debt can be proved to be unnecessary by the business.
Next, having a physical office space in your home can result in a lot of expenses that are able to be deducted including utilities and property taxes. Another tax deduction that businesses are often unaware of is health insurance. As a business owner, you may have the ability for health insurance to be deductible for you and your family, depending on the type of business entity you own. Next, employee education and training are important in the workplace to ensure knowledge on various subjects associated with the business.
Workshops and other expenses to aid in learning are deductible. Any marketing or promotional expenses that bring in customers are deductible. Lastly, some travel and entertainment costs are deductible, but not all, so make sure to research what can be claimed. Overall, monitoring of all the tax deductions is mandatory throughout the year. It should not rush to figure out during tax season to save the most amount of money possible to be put back into the business.
By Kelly Mallari
Date: March 12, 2020
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