Are you fully taking advantage of all the tax deductions that are available to small businesses? Whether you file your taxes yourself or hire just a bookkeeper, there are many deductions that go overlooked. Here are 10 helpful small business tax deductions that are often overlooked.
Tax Preparation Fees
Did you know that the costs associated with preparing your small business taxes are actually tax deductible? This knowledge can have a big impact not only on your taxes, but whom you choose as your tax preparer.
Bookkeepers or tax preparers are often extremely busy during tax season and don’t often sit down to offer advice. While tax preparer fees may be cheaper, you could splurge for a CPA or even a Tax Lawyer/CPA who can better qualify your deductions and counsel you about smarter small business tax deductions. The best part is that their fees are deductible, so the investment can certainly pay off in more ways than one.
Service Charges from Banks
Bank fees and service charges have become outrageous, nearly to the point of ridiculous. However, the service charges that you see on your statement each month could also qualify as small business tax deductions.
Cell phones used specifically for business use can obviously use the service plan fees for small business tax deductions. But what if you use your own cell phone? Self-employed small business owners who use their own cell phone can at least partially deduct the cost. While detailed records are no longer required, a call log should still be kept to help determine the small business tax deduction.
Closing Costs on Property Purchases
If you purchase property under your small business name, the costs of closing that transaction are deductible, including mortgage point fees, title insurance, and other fees listed as “closing costs”.
Property Taxes and Assessments
If your small business owns real property, the taxes and special assessments can be tax deductible. Keep your yearly tax assessment statement, as well as any special assessments for improvements to sewer, road, etc.
With the speed of technology, some software applications are outdated within a year after they are first used. Generally, software costs must be depreciated over three years.
However, if the software has a useful life span of less than a year, it can be fully deducted from small business taxes.
Furthermore, if a software package is included or installed with a computer purchase without an itemized cost of the software, it must be depreciated over 5 years along with the hardware.
If you want to purchase educational or instructional media to use for yourself or employees, the cost can be included as small business tax deductions. That includes:
Instructional Audio CDs
Computer DVD ROMs
Educational DVD videos.
Parking Fees / Road Tolls / Mileage
Don’t forget your parking fees as small business tax deductions. If you use your vehicle or company car to conduct business-related matters and have to pay for parking or tolls, keep the receipts or a record of the expense for your small business taxes.
In addition, any miles that you drive to conduct business can be deducted at a hefty $.51 per mile for 2011! If you work from home, then you can deduct mileage for all of your business errands, including going to the bank, office store, client meetings, post office, and more. At $.51 per mile, the deductions add up quickly.
If you provide coffee, other beverages, and small snacks for your employees, the cost of that service is also deductible from small business taxes.
10. Child Labor
You can hire your own minor children to work for your business, and the salaries are deducible from small business taxes. Keep in mind this applies only if you are a sole proprietor, or if you and a spouse are the only partners in a partnership.
As always, the advice presented here is just informational only. We always recommended talking to your tax professional about the small business tax deductions that qualify for your specific needs and business.