I have browsed through websites that talk about small business tax advantages. As a business owner, you are bound to pay business taxes that can sometimes be painful . But you are in luck when your business is small. You pay lesser than big companies because of your sheer size.
There are actually several ways you can minimize your due taxes. Businessmen may not know about this. Well, let me share what I have found out about these five important tax advantages needed by small to medium business entrepreneurs.
5 Small Business Tax Deductions
1. Personal Assets
According to gaebler.com in the article Tax Angles for Small Business,
You may also be able to claim the business use of other personal assets such as computers, fax machines, tools, etc. If you qualify for these deductions, you can typically claim an amount equal to the percentage of business use multiplied by the overall costs associated with the asset.
We all know that small businesses are usually home-based. In order for you to have a smaller amount of payable tax , you need to declare some of your personal office-based assets such as fax machines and printers as part of the business.
2. Auto Expenses
“You may deduct mileage, parking fees and tolls for business use of your car. Most people take the standard mileage rate deduction because the record keeping requirements are less burdensome, but actual expenses often yield a larger deduction, says Fawaz. Keep track of the mileage, odometer start and finish for each trip, destination, the starting point and business purpose”, says Karin Price Mueller in 15 Small-Business Tax Deductions.
Auto expenses are inevitable when doing a company operation. However, you need to ensure that they are spent duly for business purposes only. Otherwise, they can be made as a ground for a lawsuit if you declare them as an auto expense.
3.Health Care Tax Credit
” Insurance premiums for the business for one year or less are deductible currently, while excess prepaid premiums are deductible in subsequent years”, Fawaz says
If one of your employees, for example, is admitted to a hospital and you paid at least half of their coverage, you may declare this to your financial reports and get a tax deduction.
4. Utilities
The water, power, trash, and telephone bills at your office are all 100 percent deductible as regular business expenses, says Gregory Go in his article 31 Small Business Tax Deductions.
Just like I said, ensure that these utilities are used for business purposes only. To avoid lawsuit, you should indicate in your financial report when these were used in personal purposes.
5. Education
According to Karin Price Mueller,
You may deduct the cost of continuing education or certification for the business you’re already in, but education that qualifies you for a new line of business is not deductible, Fawaz says.
Usually, business owners send their employees for a training or education, related to their field of work. As long as the company pays for the training and further advancement of skills needed in the company, it can then be deducted to the company’s tax. Prepare some pertinent papers as proof that the training was indeed for the betterment of the company.
To look for the deductions, you do not have to think big. Think small. It is those menial and simple things that can deduct your overall taxes.
What other tax deduction strategies can business owners employ? Please share your thoughts in the comments below.
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