As Benjamin Franklin put it “in this world, nothing is certain except death and taxes.” For small business owners working hard each day, there’s so much more than that – but we can try to maximize as much as possible along the way. To an entrepreneur, small tax deductions can mean the difference between buying new software or adding a part-time employee to help out.
Here are 10 ways small business owners can maximize tax deductions in 2017, courtesy of the experts over at the IRS:
- Insurance: Your business owner’s policy, malpractice coverage and business continuation insurance.
- Meals: Business lunch, night out or other entertainment expense? Go ahead and deduct 50% - make sure you have the records to prove the business purpose.
- Your car: If you use a personal vehicle for your business, car expenses can be deducted. If the vehicle is used for personal and business, it must be divided depending on the actual miles used for each purpose.
- Capital expenses: Business start-up costs, business assets, and improvements such as new construction or HVAC upgrades.
- Your home: If you operate your business out of part of your home, you might be able to deduct that portion of your house. Expenses such as utilities, mortgage interest, insurance and depreciation can all be deductions.
- Taxes: Federal, state, local, and foreign taxes connected to your business.
- Employees’ pay: You can deduct compensation your employees earn.
- Retirement plans: You can save money on taxes through retirement savings plans for you and your employees.
- Rent: Any property you don’t own, but use in your trade or business, can qualify for a deduction.
- Interest: Any interest associated with funds you borrowed to operate your business.
These recommendations are for informational purposes only. Be sure to contact your tax professional or attorney before deducting any business expense.
While each business is unique and deductions can vary, many small businesses take a majority of these deductions each year. Save your receipts for all business expenses. You’ll need these at tax time so you can get the most deductions. To really maximize your deduction, hiring a tax preparer who specializes in the unique needs of small businesses owners is your best bet.
Keep current records for any deducted expense, and don’t forget – we’re always here to help with your insurance questions and coverages.