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Small Business Tax Write-Offs: Rules & Regulations | Business Hub |®

Small Business Tax Write-Offs: Rules & Regulations

Running a business can be expensive year-round, but it can also provide good news at tax time. The more business expenses you have, the more you can write off at the end of the year, lowering your taxable profits. Here is some tax help that may lower your overall tax bill.

Deducting Car Expenses

You can deduct maintenance costs, car payments, and insurance expenses on the vehicle you use for your business from your business taxes even if you also use the same vehicle for personal use. You will not be able to deduct 100 percent of these expenses unless the vehicle is used only for business purposes, but you can either keep track of the actual expenses you incur when using the vehicle for business purposes or use the standard mileage deduction, which is currently 55.5 cents per mile driven for business reasons. Using the latter figure may be easier when trying to deduct for things other than gas if the vehicle is one that you also use for personal travel.

Deducting Travel Expenses

Travel expenses deduction rules are a little more flexible. You can deduct plane, lodging, rental car, and dining costs while on a business-related trip, even if you do other non-business related things at your destination. Just make sure to deduct only your own expenses even if any friends or family have accompanied you.

Deducting Home Office Expenses

Many small business owners need tax help on this subject. It is common for many small business owners to simply work from their homes, which means they do not have a company car or office-space rental. Specific areas within their homes are usually designated as office space, and many of them therefore want to know if it is okay to deduct some of their home expenses for business purposes. The answer is yes, but only if the space that is used as an office is dedicated solely to business purposes. This may be an entire room or just a corner of the living room. The bigger the space used as a dedicated home office, the bigger the percentage of mortgage payments or electricity costs that can be deducted as business expenses.

Deducting Start-Up Expenses

The worst part about starting a business near the end of the year is that you cannot deduct your advertising costs, office rent, utilities, or other expenses until your business is fully operational. Until that point, these costs are considered capital expenses and are capped under IRS rules. As it currently stands, you cannot deduct more than $5,000 in capital expenses within your first business year.

The more legitimate tax deductions you can take, the less money you will owe. Added to any credits you may receive, this can add up to a very happy tax time for your small business.

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