Top Small Business Deductions
What Is a Deduction?
A major advantage of having a business is the ability to write-off business expenses. What does that mean?
A deduction is an expense that you can subtract from your gross income in order to reduce the income that you must pay taxes on. If you incurred these same expenses, but did not have a business, many of these expenses would not count towards a reduction of your taxable income.
Top Small Business Deductions
Leased space: if you use leased space, you can deduct the entire lease payment.
Home office space: if you use space in your house — and it qualifies — you can deduct the cost of the area you occupy. You can do this by using the simplified method which uses a rate provided by the IRS, or you can itemize the expenses for the space you occupy.
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Simplified method
The rate provided by the IRS is $5 per square foot. You would multiply $5 by the square footage used for business operations. This square footage cannot exceed 300 square feet.
Regular method
Figure out the actual expenses for operating witin your space. This can include expenses such as utilities, insurance and depreciation.
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Utilities: you can deduct any of the utilities you use for running your business.
Vehicle: you can deduct business vehicle operation cost by using a simple deduction ($.56/mile) or you can itemize and deduct specific expenses. Another tax deduction you can use is section 179 which enables you to deduct the full purchase/financed price of qualifying equipment/software in the first year rather than expensing over multiple years.
Travel Expenses: any costs associated with traveling for business purposes can be deducted.
Advertising: all advertising costs can be deducted.
