What to include in your small business tax deductions Plus: A free checklist!
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When you start a small business, you might not have everything figured out. You might have to wait for the money to come in to buy the extras that can improve your business, like Tailwind Plus or a paid version of a program.
It would be best if you were keeping an eye on your expenses. It can hurt you once tax season comes around, and you’re a jumbled mess.
If you don’t have much income, usually less than $600 gross adjusted income, you should be fine. If it’s more than that, you need to keep track of anything you might need to send to an accountant.
I use KeeperTax to keep track of all of my expenses. It links to any bank accounts you might have used for your small business and categorizes the tax deductions for you.
Suppose your accounts are both personal and business. In that case, you can remove purchases that aren’t supposed to be with your tax deductions.
To make things simpler, KeeperTax also lets you do a mock tax write-up to see how much you might need to contribute to your taxes. Small businesses might have to contribute quarterly taxes during the year if they make enough money. You can also contribute your yearly earnings if you have a full-time job elsewhere.
Last but not least, KeeperTax is a tax deduction! Since it’s a program that helps you run your small business, you can deduct the money you’ve spent on the monthly subscription from your taxes.
There are a few expenses that small business owners get confused about in regards to their tax deductions. Here are ten that you can include on your tax deductions if you run a small business from your home.
Tax deduction #1: Home/Rent/Mortgage
Business owners can deduce a portion of their living space through their 1099-income. Your business workspace doesn’t need to be a large portion or a separate room either to qualify.
For instance, I have a designated desk in my small business where I complete my work. It uses about 10-15% of the space in my apartment. I can contribute that amount of my rental payment to my small business tax deductions because I use it for my business.
Tax deduction #2: Utilities/bills
Just like my rental tax deduction, a portion of my utilities and bills, like wi-fi and my phone bill, can be included in my small business tax deductions.
Suppose you regularly use your utilities and bills as part of your small business. In that case, you can put them towards your tax deductions. Like a typical office workspace, you can include water, electricity, trash, phone bills, and the internet as part of an overhead expense. Again, you can’t completely write them off, but you can obtain a portion of the costs towards your tax-deductible
Tax deduction #3: Software
As a blogger and graphic designer, I have to use many software programs to keep my small business running. Like Adobe Creative Suite, some are vital, while others, like Tailwind Plus, help drive customers to my website and indirectly affect my business.
KeeperTax classifies my software as a tax deduction at about 25%. It’s a pretty big one considering how many programs are vital to managing a small business.
Tax deduction #4: Vehicles
Vehicles are a bit of a grey area for small business tax deductions. Not only can you contribute a portion of your vehicle’s cost if you use it for work. You can also include gas, polls, maintenance, insurance, and mileage.
As a freelancer, I don’t typically use my car at this point in my small business. Suppose you’re a creative business owner that needs to go places, like a wedding photographer. In that case, you should claim your car as a portion of your tax-deductible.
Tax deduction #5: Travel
Not only is your vehicle a part of your small business tax deductions, but other traveling expenses might qualify too. If you are traveling more than 100 miles a day for business, you can also claim lodging, flights, and meals.
Vehicles will have you track your mileage as well. Still, if you have any expenses that cause you to travel extensively for work, you can claim them as part of your tax deductions. Don’t go overboard and pay for a first-class ticket and extravagant meals towards the deduction. Still, you can put some of your expenses towards your taxes.
Tax deduction #6: Contractors/Subcontractors
I’ve used a few contractors to help me guide and develop my small business. Both times I’ve consulted them, their fees have gone into the small business tax-deductible. You can also include these expenses when you hire subcontractors regularly for your business as well.
Usually, paying someone can be a hefty expense, so it’s no surprise that hiring help can pay off in the end.
Tax deduction #7: Education
Education can be tricky when it comes to small business tax deductions. Learning more about being a small business owner is a significant endeavor, like buying Donald Miller’s book Building a Story Brand. Still, if it has no purpose for your real estate industry, you can’t include it in your tax deductions.
Ensure that your educational tax deductions apply to the industry that your small business is involved in. You can’t include educational materials to help you generally speaking to run your business.
Tax deduction #8: Office Supplies
Need a new accordion folder to keep your finances in order? You can include all of your office supplies in your tax deductions.
You can include anything that helps you run your business. I use two different journals to create new ideas on how to market and create content for my small business. I wouldn’t be able to count one towards my supplies, but I would put the other in this category.
Tax deduction #9: Office Furniture
To claim a portion of your home, you should have a space of your own to claim as your office space, even if it’s just a desk and a chair.
Even if you have more than a desk and chair, you’re able to claim your office furniture as a tax deduction. Business owners can also include the computer monitor in their home furniture because it helps you run your small business.
Tax deduction #10: Eating/Food
You might have a meal or a Starbucks run to meet with a client or a contractor. Don’t fret. These can go towards your small business tax deductions.
Don’t meet at the most elegant venue near you, but an inexpensive meal can be used and claimed as a business expense. Even if you are hosting a party, you can deduce the cost of the food you buy for your tax deductions.
You might not consider your expenses to be extraneous to run your small business, but everything counts when getting your taxes done right. Keeping track of your expenses with an app like KeeperTax or hiring a bookkeeper or accountant to keep track of anything, is well worth the investment to know you are doing everything you can to do things right.
As a small business owner, it’s helpful to know you have a lot of options to contribute to your tax deductions for your small business. Knowing your options can help make your tax deductions seem more plentiful than when you started your business.
Need more help with your tax deductions for your small business? Download my small business tax deduction checklist to keep track of your expenses. See more in my newsletter on how to get the most of your finances in your small business.
