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Is Your Small Business Getting Too Taxed?

Andrew Lisa

September 05, 2014

One of the great things about owning a business is that many deductions can benefit entrepreneurs at tax time.

For small businesses, capital is everything - and let's be honest, at least part of the reason you opened a business in the first place was to make money. Don't give money away to the government that is rightfully yours.

Benefitting from available deductions requires meticulous record keeping, diligence at tax time and a thorough knowledge of the potential benefits, which sometimes are easy to miss. 

Don't Take the Easy Way Out

When it comes to home office and car expense deductions - both of which are major categories that affect many businesses - there are two ways to do things: the easy way and the hard way.

Although the easy way is, well, easier, the hard way may save you a whole lot more money come tax time.

Hard Way: Auto Deductions

According to a recent report, new IRS rules make it simple to calculate deductions for auto use. You simply knock off 56.5 cents for each mile driven for work-related travel in 2013.

But if you're willing to do a little legwork, you can save hundreds more.

Divide business-related miles by total miles driven. Apply that percentage not only to gasoline, but to all expenses that went to vehicle "betterment", including car washes, tire changes - even satellite radio.

Hard Way: Home Office Deductions

The hard way pays for home-office deductions, too.

Instead of settling for the IRS's standard $5 per square foot up to 300 feet or $1,500, squeeze out potentially thousands more by measuring your office's actual square footage, divide it by your home's total square footage and apply that percentage to a wide range of home expenses, including utility bills and even interest on your mortgage.

Non-Business Deductions

Not every deduction is directly related to your work, but just because it's not part of your job doesn't mean you can't save big money in April. <a

As the following article shows, “Don't let any tax deductions slip by”, including things like interest on student loans, money spent while looking for a job, jury pay returned to your boss and, of course, charitable donations.

Potential deductions can be hard to find and easy to miss.

But if a penny saved is truly a penny earned, then squeezing every available dollar out of tax benefits is not a sweepstakes or end-of-the-year giveaway – it is part of your business obligation.

Deductions are there for the taking - don't miss out!

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