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What Business Expenses Can I Deduct?

Every day as a business owner, you spend time working on your business and growing it for the future. Most of the decisions you make, however, will come with expenses along the way. Many business owners often wonder “What Business Expenses Can I Deduct?”

Learning to manage those expenses and deduct what you are able will help you to be a better business owner and to make your business more successful. Here are a few common expenses that you should definitely be keeping documentation of and deducting each year when tax season comes around.

Supplies and Equipment

There is no way to run a business without using equipment and supplies to keep it going. And while some of those costs start out pretty small, they can grow quickly and make your budget difficult to manage. You can deduct the supplies and equipment you pay for from your yearly taxes in order to save and make your business more profitable. It is important to remember to track these expenses carefully so you know how much to deduct and can make those deductions appropriately. That way you won’t overpay for your supplies or on your taxes and you have everything you need to keep your business running.

One of the most overlooked expenses is the deduction for office equipment provisioned by the 179 Tax Law, which allows you to write off, among other things, all qualifying leases for business machines, including multifunction devices and wide format printers. You can read more about it here.

Marketing and Advertising 

Many of your costs will come in the form of the marketing and advertising you do to promote your business. Learning to deduct these costs will save you money and help you to better use your budget when promoting the great things your business has to offer. Whether you do your marketing in house or hire a marketing company, you can deduct your costs and improve your tax standing. There are many elements involved in properly marketing and advertising a company and your taxes should adequately reflect that spending, so you aren’t missing out on any important deductions.

Insurance Costs 

It is also essential that you have insurance coverage that can protect you from potential liability or harm at your workplace. Those insurance costs can add up, especially as you strive to get all the necessary policies you need. Remember to deduct these costs so that you can have the protection you need without overpaying. It’s important to talk with your accountant about the ways you can deduct insurance costs and how to get the best and most accurate deductions for your insurance spending, especially if your business offers employee insurance. Paying for insurance for aspects of your business can feel expensive, but with the right deductions it is much more affordable.

Electricity Bills 

Your utilities are a constant expense that you should be taking care of and working to decrease not only through deductions but also through more efficient energy use. Going for more sustainable electricity can help you to save money and give you access to some great deductions that can recoup many of your costs. It’s also important to think about the individual aspects of your office and how they impact efficiency. Doing small things like tinting your office windows reduces your A/C bill and helps reduce annoying glare from the sun. Then you can also seek deductions in your taxes, so your overall utility costs are much more affordable.

 

Depreciation on Company Vehicles

One of the biggest purchases you make for your business is the purchase of a vehicle, and those costs can feel extensive, especially if you purchase multiple company cars. You can deduct the costs of cars from your company vehicles. However, it works differently than many other kinds of deductions. Vehicles are generally deducted through the process of depreciation. This means that deducting the costs of the vehicle each year must happen over the course of several years. The process of depreciation can feel overwhelming if you don’t understand it, so it is worth talking to an accountant to get the full details on the process and make sure you file for it correctly.

Rent on Business Property 

Another major cost is, of course, your business property. And if you are paying rent on a building or office space, you can deduct at least some of those costs. If you are looking to save more on your business property costs, you can look for as small a space as possible and have employees work remotely when possible. Another option, if you have a bigger space, is to sublet some of the space to other businesses in order to cover some of your rental costs. Making smart decisions about your company property will help you to be more financially sound.

Some Travel Costs 

Traveling for business can do great things for the growth of your company, but it also gets expensive. If travel is a regular part of your business operations, it is essential to deduct those costs, but still useful even if you only take occasional trips. The main contingent is proving that all costs you deduct are actually related to business purposes. You can get into some bad situations if you take advantage of travel deductions when you are doing more recreational aspects of trips, but if used properly you’ll be saving a lot on needed business trips.

Maintenance Costs 

No business property can keep doing its job well if it isn’t well-maintained. It’s also important to do if you want to avoid bigger expenses down the line. You can deduct some of these maintenance costs so you aren’t footing the whole bill on your own, which at times can be quite large if major fixes are needed. Just be careful making smart maintenance choices so you can get the deductions and care that your business needs.

As you run your business, you will surely run up against expenses that are unexpected and large. Luckily, the U.S. government has laws in place to support businesses. If you are taking care to use all appropriate tax deductions, you can minimize costs as much as possible. Make sure that you are paying for the things you need and keeping track of them with your taxes. Then your budget can be used towards more useful things to build your business!

Read this next: Implementing a Hybrid Workforce Model

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