Top Small Business Tax Deductions – Saving Money Deducting Expenses

Through the use of the top small business tax deductions, you can actually save your business a lot of money avoiding tax liability.  The more business deduction you use to your advantage, the lower your taxable profit will be, this translates into more money in your pocket come tax season.

It is important for every business owner to pay extra attention to IRS rulings regarding exemptions as these are the key to avoiding IRS problems and maximizing your savings. It is easy to overlook or undervalue small deductions and exemptions because there seem insignificant, however, you will be surprised that once you have accumulated all the amounts coming from the top small business tax deductions, the total can provide jaw dropping leverage to protect what you earn.

Here are some of the business tax deductions that you can use to lower your taxable profit and keep more money come tax time.

  1. Vehicular or Automobile Expense Deductions
  2. It is important that you were able to properly document all records and transactions for  any expenses related to your automobile or transportation means to be able to take advantage of this deduction. You can use this by deducting by mileage costs or by the actual expenses from maintaining the vehicle or fuel consumption. All verifiable itineraries regarding the uses of the vehicles must be properly noted as well clearly showing that the auto was put to use for business purposes.

    You should keep a record of the places that you visited, the reasons of your travel and the person you met during your travel in order to take advantage of the vehicle tax deductions. Newly acquired vehicles can also be used for this purpose, and the age and value can help determine which method of deducting your vehicles will best benefit you.

    There are two way to claim business vehicle expenses. One is to deduct all your verifiable business-related outlays and the other one is to deduct a definite amount for fuel or mileage use, parking fees and tolls.

  3. Education and Training Expense Deductions
  4. Publication 970 on “Business Deduction for Work-Related Education” details further available education and training expense deduction opportunities. Through this deduction, you can write off seminars, trainings or any college/university course tuition fee provided that the courses that you or your employees take part in are related to yours or their job functions. It must be for the purpose of proper maintenance or improvement of your skills applicable to business.

    You can also deduct transportation expenses used going to and from the place of training, seminar or program.

  5. New Equipment Deductions
  6. It is stated in the Section 179 of the IRS code that a small business can deduct a maximum of five hundred dollars from the cost of newly acquired equipment or other tangible assets.

    There are, however, some exclusion with regard to this ruling like real estate properties or property purchased from a relative. Some of the equipment that is included in this tax exemption are personal computers and laptop, industrial machines, office furniture, etc. To be able to make use of this deduction, you need to use the Form 4562.

  7. Entertainment Expense Deductions
  8. A 50% deduction from the actual cost of entertainment expenses can be written off provided that the purpose to entertain is business related. Taking out guests for a conference meeting or luncheon at your office can be justified for these expenses.  It must always be related to a business meeting or a conference, before during or after the event.

  9. Charitable Donation Deductions
  10. A small business that has been registered as a partnership, an S company or a limited liability corporation, can claim a deduction if your company made a charitable gesture in the form of a cash donation. Non-cash donations also have a corresponding deduction provided that the items that you are donating has not yet been depreciated.

  11. Software Expense Deductions
  12. Provided that the software purchased was used in the same year, business owners can deduct the full value from their tax returns – translation: tax savings.

  13. Travel Expense Deductions
  14. Business related travel expenses that have not been reimbursed are considered deductible in your tax filing. You can deduct the transportation expenses (airfare, land and water transportation allowance), board and lodging, and a portion of meal allowances. You can also deduct expenses made for business associates that travelled with you or any other person that accompanied you provided that they are not part of your workforce and are not involved in your business.

  15. Marketing, Promotions and Advertising Expense Deductions
  16. Any expenses related to marketing, advertising and or the promotion of your products and services like sales paraphernalia, stationery and or business cards is tax deductible.

    Sponsoring sports programs and community activities or anything that is performed out of goodwill is also tax deductible provided that it has a relation to your business, products or services.

    You can check out Publication 535 to see what is applicable for this kind of deduction or consult your accountant if you feel you are not taking full advantage of available deductions.

  17. Legal Compliance-Related Expense Deductions
  18. Any expenses made because in order to achieve legal compliance are tax deductible. Expenses made to pay for books, accountants, lawyers and tax experts are included in this deduction.

    All other expenses that are related to properly adhering to the rules of the IRS can be deductible. Tax consultations are also included, meaning you get a professional on your team to help you keep more of your money all while deducting the actual expense for further savings!

  19. Bad Debt Deductions
  20. This deduction can only be applied for products that were considered sold but were not properly collected. Any products that were not paid for by a client can be deducted, or written off as some say. However, a service that has been rendered and does not receive payment is not tax deductible.

Taking full advantage of the tax code, in your favour, is often a matter of knowing the multitude of tax deductions that are allowable and taking advantage of the items that best fit your business.  The top small business tax deductions, ultimately are determined by what will help you keep more money at tax time. 

Deducting small expenses, when accumulated can equal huge savings, so don’t overlook the benefits of taking advantage of every deducting opportunity for your business.


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