Every dollar counts with the high cost of doing business. Failing to claim all the small-business tax deductions to which you’re entitled is like throwing good money out with the bong water.
You probably know that you can deduct salaries and wages, office supplies, the cost of repairs and insurance, and money spent for rent and leases. But here are some commonly overlooked deductions of which you can also take advantage.
Advertising costs
Aside from word-of-mouth, letting people know about your business isn’t free. Advertising is a necessary part of doing business and is therefore deductible. Think beyond fliers, business cards and magazine ads – other costs you can report to ease your tax burden are billboard rentals, fees to companies that manage your social media accounts, subscription-based social media sites like LinkedIn Pro, prizes for giveaways, and even sponsoring a bowling team.
Startup Expenses
Starting a new business could be worth $10,000 before you even open the door. For new businesses, most costs are supposed to be amortized and deducted over 180 months, with one important exception: The IRS allows a deduction of up to $5,000 for each of two categories in the business’s first tax year. The first deduction-eligible category covers expenses, such as market analysis, employee training, and advertising. The second category includes organizational expenses including costs for setting up the business structure, legal fees, state organizational fees, and travel expenses for organizational meetings.
Business Entertaining
You probably already know you can deduct the cost of going to an industry-related trade show or convention. What you might not be aware is that Uncle Sam will pick up the check (or at least part of it) for your entertainment expenses. If you take a business client out for drinks or dinner, you can write off half that expense. It can also be deducted if it is associated with the business and the entertainment takes place directly before or after a business discussion.
New Fixtures
Did you buy new showcases or clothing racks? You have a choice regarding how you take your small business tax deduction for furniture and equipment. You can either deduct the entire cost in the year of the purchase, or you can depreciate the purchases across a seven-year period. The IRS has specific regulations that govern your choices here, so make sure you’re following the rules.
Credit Card Fees
Who carries cash anymore? Accepting credit cards makes transactions quick and easy, but it doesn’t come without a price — merchant account companies charge up to 5% on everything a company earns from credit card sales, including processing costs and statement fees. Don’t worry — the IRS considers these deductible fees. Merchants that use business credit cards may also be eligible for deductions, depending on the annual rates which they must pay.
