Tax Write-Offs For Your Business
If you are a small business owner, there are several deductions available to you if you know what to watch out for. To reduce your tax liability and save money with the Internal Revenue Service (IRS) each year, there are some common deductions to keep in mind:
Start-up Cost Deductions: these are deductible expenses accumulated by starting up your business. You can deduct up to $5,000 in start-up and $5,000 in organizational costs during the first year of operation. These deductions are valid if they were paid or incurred after Oct. 22, 2004. There are different rules for expenses prior to that date or if your costs go beyond $50,000. Expenses that aren't covered can be amortized over a 180-month period as soon as you open your business. These include market research, advertising, employee training, and others.
Educational Deductions: for more information, read Publication 970 for everything about educational deductions. As a general rule, employers are allowed to deduct educational expenses for employees if the class work can help improve job-related skills or if that work is required for continued work at the company. For employers who are self-employed, some education expenses like transportation to and from class can sometimes be deducted.
Vehicle Deductions: You must keep very detailed records for this type of deduction. Whether you are deducting based on mileage, gasoline amount or for maintenance, make sure you are keeping records. If you use your personal vehicle for business related reasons, keep a record of how far you went and why. If an employee uses a business car for personal reasons, make sure to note it on their wages and W-2 forms. Did you know that you can even get credits for using environmentally friendly cars? The use of hybrid cars can give you a tax credit of up to $3,150.
Deductions for Your Cell Phone Bills: If you use your cell phone for business, you can deduct it on your taxes. Do not use it for personal calls, though. Keep good records, including the physical bill, as proof that calls were made for business.
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