As a small business owner, you’ve got plenty of overhead costs to factor in, which eat into your profits. Not to mention, there are also taxes you need to pay, which can make it tough to stay afloat.
But tax avoidance isn’t something illegal. In fact, it’s something you should practice to keep as much money in your pockets as possible!
Want to learn more? Read on for the types of tax deductions you can get as a small business owner.
Many entrepreneurs and small business owners have home base operations. What’s great about this is you can deduct your home expenses as business ones.
For example, you can deduct things like rent and utilities. If you’ve bought a new computer, laptop, table, chair, etc., you can claim those as business expenses. As the years go by, these things will depreciate in value, but you can still get tax deductions in later years.
Everyone’s got to eat, and it’s pretty much inevitable that you’ll need to take a client out to lunch for a meeting. You should know that in 2021 and 2022, tax deductions for restaurant food went up from 50% to 100%, so take advantage of this.
You should note that this includes both food and drink, and you can either eat in the restaurant or order takeout. However, you need to buy from an actual restaurant; unfortunately, anywhere else (like a grocery store) doesn’t qualify for tax deductions.
Do you drive out to see your clients or to pick up supplies? Then you should know that self-employed people can get a tax deduction for every mile you drive, so long as it’s for your business!
In 2022, you can deduct $0.585 per mile, so make sure you keep a detailed log of how much you drive, when, and for what. It’s very possible that the IRS will ask for additional information, so be prepared.
Most businesses will have some sort of insurance policy, as well as health insurance for the owner. The good news here is, these costs are all 100% deductible.
In addition, thanks to the qualified small employer health reimbursement arrangement (QSEHRA), your small business can qualify for up to a 50% tax credit for health insurance.
Anything you spend money on to advertise and market your business will qualify for tax deductions. So long as you can prove it was business-related, feel free to get creative here. Things like business cards, thank you cards, and more qualify!
If you want to keep learning, then check out these 10 tax planning strategies you can use.
Use These Types of Tax Deductions to Your Benefit
Now that you know about the types of tax deductions you can get, business ownership should hopefully be a bit easier. Many of these might come as a surprise to you, and you’d never have thought to deduct them from your taxes. So take full advantage of them today!
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