Top Tax Write Offs For Small Businesses

Chalk board featuring taxes, USD symbol, and piggy bank full of money indicating tax savings and write offs

Every small business owner knows that, come tax time, there are ways to save a fortune in taxes if you are clever. Looking for the right tax write offs for small business owners, however, can be a bit of a challenge and we’re here to help point you in the right direction. Here are a few of the top tax write offs for small businesses:

Travel Costs

If you have to travel for your business, you can almost always write it off as long as it’s distance travel. Local commuting, such as driving from your home to your office, generally doesn’t apply. However, other types of travel might, such as the costs of delivering items locally. But if you have to send someone from your business to a meeting across the country, the cost of your plane ride and hotel stay is almost certainly deductible. To find out whether or not your travel expenses can be deducted, read IRS Publication 463 in full. Make sure you keep a thorough documentation of all of your business expenses, such as mileage and airline receipts.

Utilities

Any money you spend on utilities for your business is deductible. For small business owners, however, this can enter a bit of a grey area as you strive to answer the question of where your personal costs end and your business costs begin. For example, let’s say you work from home and have a landline to receive calls on. Is your phone bill then deductible if you take business calls? If you have only one landline, the answer is no. However, if you set up a second one solely for business purposes, you will be able to deduct the cost of that phone bill. Similarly, if you have a cellphone you use only for business purposes, you will probably be able to deduct it from your taxes.

Home Office

If you work from home, you might have a home office set up in one of the rooms. You can deduct the cost of anything in your home that is devoted solely to your business. This means that if you have a workstation in your bedroom, you cannot deduct the entire cost of your bedroom, but you can measure out the space around your desk and deduct the cost of your mortgage and insurance from that area only. You will have to divide the square footage of that space by the cost of your home to discover the exact amount.

Contract Labor

Often, small business owners don’t keep employees on staff for necessary labor, and simply hire contractors when labor needs to be done. Keep a thorough record of any contractors you employ, because the money you spend on them is usually deductible. If you pay any contractor more than $600 throughout the tax year, make sure they are given form 1099-MISC.

Insurance

If you are self-employed, you are probably paying for all of your own health insurance costs. This can set you back quite a bit, but the good news is that it’s a tax write-off. If you are eligible for insurance from other sources, however, you will not be able to insure yourself and deduct it. Similarly, if your insurance costs add up to more than the net profit of your small business, you will not be able to write them off.

Meals

Business meals are 50% deductible, which means wherever you end up eating you will still pay half! Keep this in mind if you are trying to save money while also wining and dining prospective clients. Check IRS Publication 463 to see how to substantiate the expenses of meals; you will not be able to claim any deductions if you don’t.

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