Every year as the tax deadlines roll around, business owners find themselves scrambling to file their business taxes. As a result, these owners often miss important deductions that could end up saving them a significant amount of money. However, a little pre-planning and research can help a lot. For example, here are seven business tax deductions that are commonly overlooked.
Working from Home
A home office can supply a business owner with major business deductions. Most are aware that a home office can be deducted, but did you know it doesn’t have to be an entire room? The area just has to be devoted exclusively to the home office. Just measure out the work area and deduct that percentage from all home-related business expenses such as the mortgage and insurance. Even expenses like phone calls can be included here. Not a bad way to help pay for home expenses.
On the Road
Traveling can offer additional hidden Reno business deductions. In fact, many owners overlook the incidentals charges such as car rentals, tipping employees, and even dry cleaning expenses. Another major deduction involves company vehicles. In 2010, up to 50 cents per mile can be deducted for business trips. This can really add up when you consider the number of business miles driven in a year. Plus, don’t forget things like maintenance and insurance. Even if the car is used for personal use, a percentage can still be deducted.
Perhaps the only thing more complicated than business taxes is dealing with benefits. However, a CPA can help business owners find hidden deductions here too. For example, if an owner is considered self-employed, he or she can now deduct the premiums not only from the income tax but from the self-employment tax. Finally, don’t forget business deductions for retirement benefits. The self-employed pay double the social security, but the IRS will allow half of that to be deducted. That’s a huge savings.
What if it’s a family business? There are overlooked business deductions here too. For example, if a business owner is a sole proprietor or is in a partnership with a spouse, a Reno CPA might tell them to put the kids to work! As long as the child is 17 or younger, no social security taxes will be collected, and the salary can be deducted as a business expense. No other employee comes with those benefits to the company.
Operating cost deductions can only be taken for expenses incurred after the business opens its doors. As a result, many owners miss start-up costs such as lawyer’s fees or licensing fees because they occur before opening day. However, these can still be taken as part of the business deductions for start-up. In most years, this is up to a $5,000 deduction the first year with the remaining spread over 15 years in equal amounts. In 2010, the first year deduction was doubled up to $10,000! Now, that’s a deduction!
Of course, there are a plethora of other business deductions that can be overlooked by business owners – subscriptions to trade magazines, memberships to professional organizations, and dining out expenses, just to name a few. To make the most of these on your business taxes, contact a Reno CPA. He or she will help find not only the seven deductions mentioned above, but may just find a few more that can really affect your bottom line.
Reno’s Best CPA,