Taxes can be confusing and intimidating, especially for small business owners who are just starting out. But, understanding the deductions and credits available to small businesses can help you save money and maximize your profits. Edgewater CPA Group is here with a list of five tax deductions that every small business should take advantage of when filing taxes.
1. Home Office Deduction
If you use a portion of your home exclusively for business purposes, you may qualify for a home office deduction. You’ll need to determine the exact square footage used for business and calculate what portion of your overall utility bills is attributable to that space. The IRS also has specific guidelines about how much you can deduct in comparison to the total size of your home, so make sure to check those details before filing this deduction.
2. Vehicle Expenses
Do you use your personal vehicle for business purposes? If so, you may be able to take advantage of vehicle expense deductions on gas, maintenance costs, insurance payments, parking fees, tolls, and more. As with other deductions, it’s important to track all related expenses carefully and keep detailed records in case the IRS ever asks questions about them down the line.
3. Advertising Costs
Every small business needs advertising to reach new customers and build awareness around its products or services. Luckily, advertising expenses are one of the most common types of deductible expenses available to small businesses. You just need to make sure all receipts are stored safely and securely throughout the year as proof of purchase if needed by the IRS at any point.
4. Professional Services
Did you hire an accountant or bookkeeper this year? Or, maybe an attorney or consultant? Any professional services related solely to running your business are tax deductible! Just like with other deductions, though, it’s important to keep good records in order to prove that these services were related solely to business functions and not personal ones (otherwise they won’t be eligible).
5. Retirement Contributions
Not only is saving for retirement good practice financially but it can also be beneficial from a tax perspective as well! Contributing a certain amount towards employee retirement plans each year can result in significant tax savings depending on your total income level—which means more money in your pocket at tax time!
Tax Season Is Here & Edgewater Can Help
Understanding which tax deductions apply specifically to your small businesses can help lower taxable income significantly over time. So, if you’re looking for a reputable CPA in Carmel, IN, give Edgewater CPA Group a call at (317) 386-7021. We provide companies with tax preparation, payroll, and bookkeeping. And remember, you still have time to file your tax extension if you need one. Schedule your consultation with our office today,