Tax Deduction Tips for Small Businesses
Most entrepreneurs start a small business because they have a vision and a dream about working a certain way, towards a certain goal and want few restrictions limiting their efforts. Owning a small business can be rewarding in many ways, and tax-time is no exception. Below are tips to help increase your deductions and lower the amount of tax your business will pay.
1. Keep track of your mileage. Keep detailed records of each time you go to the post office, the office supply store, and every client meeting! Those miles add up and can generate significant deductions. You must keep up with your mileage driven, the purpose of the trip and the date.
2. Take a home office deduction. If you have a qualified home office you can deduct some of your homeowners insurance, a portion of your utilities including your cell phone bill, and even a portion of your rent or mortgage payment.
3. Deduct health insurance premiums for yourself, your spouse and your dependents. The policies do not have to be in the business’s name to qualify. And keep up with prescription cost and doctor office co-pays. These expenses add up quickly.
4. Turn your charitable contributions into business expenses. Under normal circumstances, you can’t deduct charitable contributions on a Schedule C. But if you give money to charities in exchange for advertising, it is considered a business expense. Donating in this way will give you a greater tax benefit than the itemized deduction.
5. When possible take a business deduction instead of an itemized deduction. When you take a business deduction, it reduces your adjusted gross income as well as your self-employment tax.
6. Increase your retirement contributions. This is a great way to reduce your adjusted
gross income and reduce taxes. Contributions are limited but you can contribute more
by opening a SEP, SIMPLE or profit-sharing plan instead of the traditional IRA.
There are many more tax deductions available to small businesses. You should rely on
the experience and knowledge of the team at Randolph Business Resources to help
you get every deduction available to your business, reducing your tax burden as much as