Commonly Overlooked Small Business Tax Deductions

Wed, Jul 18, 2012


Small business owners are notoriously strapped for cash, and it’s no wonder when you consider that they’re in competition with mega-corporations that have tons of funding from both banks and private investors. In truth, small businesses simply operate on a smaller scale and therefor a smaller budget, but that doesn’t mean the small business owners out there can’t make the most of their tax filings to get a little (or a lot) back at tax time. At the very least you don’t want to be left owing money to the government, so you need to make sure that every possible deduction is accounted for. And while you are probably already aware of some well-known write-offs (equipment and office supplies, client meals and gifts, depreciation of a work vehicle, etc.), there are quite a few deductions that you could be missing out on simply because you’ve never considered them. Here are just a few that are commonly overlooked.

  1. Self-employed health insurance. You may already know that you can write-off medical costs (as long as they fit certain guidelines) and for the self-employed this includes premiums, office co-pays, and so on. What you might not know is that you can now claim this deduction in two areas: your income tax and your self-employment tax. For small business owners this could be a real boon.
  2. Professional fees. Any time you have to pay for fees associated with maintaining or advancing your business you may deduct them. For example, the annual expense of renewing your business license (or any other licenses associated with your profession) can be written off, along with training and seminars, professional memberships (chamber of commerce, trade groups, etc.), and even literature like trade publications or magazines related to your field. Any fees required to keep your business running and competitive may be eligible for deduction.
  3. Travel expenses. If you travel frequently on behalf of your business then you probably already know about the major deductions (airline tickets, lodgings, rental cars, etc.), but you may not realize just how many little things you can tack on, and boy do they add up! For example, you can write off baggage fees, cab fare, and even tips for service staff. You’ll want to check with your tax preparer to make sure you’re not missing out on any potential add-ons from your trips, but as long as you keep receipts for everything (and meticulously document cash spends) you should be able to claim all (or at least a percentage) of every expense involved with business travel.
  4. Environmental efforts. These days there are all kinds of deductions for eco-friendly efforts made by businesses and individuals. And while you might not be keen to run out and get an electric car for your business, you could claim deductions for the inclusion of energy-saving measures in your office (or home office), including such items as efficient light bulbs and electronics, double-paned glass, and of course, alternative energy devices (like solar panels).
  5. Investment, legal, and tax preparation fees. If you invest on behalf of your business, any fees you pay for transactions may be deductible. And the cost of legal or accounting advice related to your operation, as well as any expense associated with filing your taxes each year, are also write-offs in many cases. An online masters in accounting will give you the tools you need to find all of these deductions on your own, but since you can write off the cost of hiring a tax specialist to find them for you, why wouldn’t you hand the job over to the pros so you can focus on your own business?
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