Running a small business comes with its fair share of challenges, but one way to ease the financial burden is by understanding the variety of expenses that can be deducted to reduce your taxable income. From the tools you use every day to the space you work in, many of these costs can qualify as tax-deductible, potentially saving your business money and boosting your bottom line. Knowing which expenses are eligible and keeping accurate records can make a significant difference come tax season.

Common Deductible Business Expenses:

• Advertising and Marketing: Costs for promoting your business, such as online ads, print materials, and social media campaigns.
• Vehicle Expenses: If you use a car or truck for business purposes, you can deduct related expenses. The IRS offers a standard mileage rate for calculating these deductions.
  Internal Revenue Service
• Commissions and Fees: Payments to non-employees for services rendered, including freelance or contract work.
• Depreciation: The gradual deduction of the cost of business assets over their useful life. This includes equipment, machinery, and certain property.
• Employee Benefits: Expenses related to health insurance, retirement plans, and other benefits provided to employees.
• Insurance Premiums: Premiums for business-related insurance policies, such as liability or property insurance.
• Legal and Professional Services: Fees paid to attorneys, accountants, or consultants for business services.
• Office Expenses: Supplies like paper, ink, and other essentials needed for daily operations.
• Rent or Lease Payments: Costs for renting office space, equipment, or vehicles used in your business.
• Repairs and Maintenance: Expenses for fixing or maintaining business property and equipment.
• Supplies: Items consumed in the course of business, such as raw materials or inventory.
• Taxes and Licenses: Business-related taxes (excluding federal income tax) and licensing fees required to operate legally.
• Travel and Meals: Expenses for business travel, including transportation, lodging, and meals. Note that meal deductions are typically limited to 50% of the cost.
• Utilities: Costs for electricity, water, internet, and phone services used in your business.
• Wages: Salaries and wages paid to employees for their services.

Home Office Deduction:

If you operate your business from a home office, you may qualify for a home office deduction. The space must be used exclusively and regularly for business purposes. The IRS provides guidelines on how to calculate and qualify for this deduction.

Record-Keeping Tips:

• Separate Accounts: Maintain distinct bank accounts and credit cards for business and personal use to simplify tracking.
• Organized Records: Keep detailed records of all business expenses, including receipts and invoices.
• Accounting Software: Utilize accounting software to monitor expenses and generate financial reports.

Consult a Tax Professional:

Tax laws can be complex and subject to change. It’s advisable to consult with a Certified Public Accountant (CPA) or tax professional to ensure you’re maximizing your deductions and complying with current regulations.

For more detailed information on deductible business expenses, refer to the IRS’s guide on business expenses.

Note: This information is intended to provide a general overview and may not apply to all situations. Always consult with a tax professional for advice tailored to your specific circumstances.

Sources: https://sba.thehartford.com/finance/taxes/business-expenses-list/?cmp=EMC-SC-SBA_240702-09411492&eml=1

If you or someone you know, has interest and wants to learn more, schedule a casual call with Telanda through our website: https://bit.ly/TFESchedule

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