Business Deductions - What You Need to Learn About Tax Deductions in Small Businesses
by: James A Karl
Today's economic problems have focused on the fact that it is important more than ever to save every penny you produce in your small business. With revenues becoming hard to earn, it is no wonder businesses try to find ways on how to trim costs as much as learning ways to increase business earnings. Therefore, as a small business you need to determine the deductions that are required of your business so you can take advantage of them and also save money in the process. Here are some of them:
Running a business includes advertising expenses such as office supplies, repairs and utilities. These can be deducted as business expenses but not so before you officially open your business. One tip wherein you can make a profit immediately is to work around this rule by delaying paying some of the bills until after you are in business.
Legal and professional fees such as lawyers and tax consultants' fees are deducted in the year incurred. But if the overall work relates to the future years, then they are deducted over the life of the benefit.
If traveling is required for your business, then you can deduct many expenses such as cost of the plane ticket, the taxi expenses, lodging meals, telephone calls and tips.
Educational expenses can also be included if they are related to your current business, but you must follow by the strict rules. The education you will be receiving should be a necessity which can improve your skills for the advancement of your business.
Taxes associated with your present business are deductible but this will usually depend on the type of tax. For instance, the fuel taxes used for your business car are separately deducted as expenses. In the case of real estate tax on property, this is deductible along with any special assessments for maintenance and repairs.
Advertising costs of goods and services such as yellow pages ads and business cards are deductible as a current expense. This is also applicable to promotional costs that helps create business goodwill such as sponsoring an event which is directly related to your business.
Like many other small businesses, you may use credit finance business purchases. In this case, the interest and carrying charges are fully-tax deductible. This is also pertinent if you are using a personal loan and will be using it for your business. But you must make sure that you keep a complete record showing that the proceeds of the loan were really used for your business. Otherwise, if this is audited later the interest deductions will not be allowed because it will be considered as a personal expense.
Regarding car expenses, the good news is that if you use your car for business, you can deduct some of the cost of keeping it on the road. This process can be quite tricky but will be well worth your time.
These are only some of the deductible costs that you can use for your advantage. Learn them well and rest assured you will be able to save money and decrease the cost of your expenses in the most beneficial way.
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