Sarah Brooks

Sarah Brooks is a freelance writer living in Glendale, AZ. She writes on anti fatigue mats, health and small businesses.

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Do You Have Your Small Business Tax Deductions Lined Up?

Sarah Brooks

January 15, 2014

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Owning a small business is no easy feat.

You're in charge of essentially everything - from hiring and marketing to balancing spreadsheets and filing your taxes. Small business owners can wind up owing a fortune to the government if they aren't aware of all their deductions.

Here are five tax deductions for small businesses that are easily overlooked, but can you save you thousands:

Travel expenses

If you attended any businesses conferences this year, met with any clients or traveled for any reason related to your business, you can deduct these expenses. Traveling expenses include airfare, car rental, hotel room, food, baggage charges, cleaning fees, local transportation costs and more.

Keep in mind that personal travel can never be deducted from your taxes, even if you own a small business. Expenses deducted must be reasonable and necessary.

Also note that the IRS allows you to deduct 50%, not 100%, of your business meals and entertainment expenses when traveling.

Home office and office equipment

If you run your small business out of your own home, you can claim part of your home as your office and deduct certain expenses.

Items you may be able to deduct include maintenance in your office (such as painting or general repairs), a portion of your rent, a portion of your utilities (such as cable and internet), a portion of your real estate taxes, and more.

Office equipment may also be deducted from your taxes.

This includes large items such as computers or fax machines and small items such as your desk, chair and even postage stamps. Note that you cannot deduct postage stamps for items that you sold or shipped out; that would be considered part of your cost of goods sold.

Decorative items can even be deducted, such as an expensive painting in your office. Just make sure that these items always stay in your office and are not moved to another area in your home.

Vehicle expenses

Vehicles that are used for business purposes may be deducted from your taxes. If you have a specific vehicle that's used only for business, 100% of the costs can be deducted.

If, on the other hand, your vehicle is used for both business and personal use, you'll have to keep track of all of your expenses (mileage, fuel, maintenance, etc.) and deduct a portion of the vehicle from you taxes.

If you only have one car, the IRS will not allow you to deduct 100% of your vehicle as a business expense, so make sure to keep track as that's a huge red flag for being audited.

Furthering your education

Taking classes, attending seminars and furthering your education (for the purpose of your business) all count as a deduction on your taxes.

Again, keep track of everything that's used to further develop you as a business professional. Items that can be deducted include cost of certifications, membership fees in business-related organizations, training seminars and even subscriptions to professional magazines and newspapers.

Retirement tax credit

It pays to contribute to your retirement account - literally.

The first $2,000 that you invest (into a 401K, IRA or Employee Pension plan, for example) counts as a credit, which results in a reduction on your taxes.

Keep in mind that any additional contributions that you make are pre-tax as of now, so it makes sense to contribute as much as you can afford to each year.

As always, it's best to consult a tax professional in order to ensure you don't miss any deductions.


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