Tax season can be a very stressful time for everyone. Small businesses in particular feel an added burden during this time of the year. Many times, small businesses do their tax returns on their own because of cost or time constraints. In his article, “5 Tax Breaks for Small-Businesses,” Jeff Reeves of USA Today explains five commonly missed deductions that small businesses can take. These deductions could accumulate to a significant amount of saving for these businesses.
The first deduction outlined is Legal and Consultancy fees. It is not commonly known that businesses can actually deduct the cost they incurred from having their taxes prepared. Legal expenses, accountant fees, and IT consulting are all deductible. The tax code is designed to give deductions for the expenses that businesses acquire from running their organization.
Another commonly overlooked deduction for small businesses involve marketing expenses. Any work the company does to build their brand and reach their customers and community can be deducted on their tax forms. This could be anything from printing coupons to supporting a local sports team.
Small businesses can also deduct bad debt and theft expenses. The IRS allows businesses to deduct the actual cost of the physical goods that the company lost money on. In should be noted however, that costs of labor and time associated with these losses cannot be deducted.
Loan interest is another expense that can be deducted. Many small businesses have loans outstanding that they used to start the company. Because many also do not have a reliable cash flow, they often use credit. Both the interest and carrying costs for loans and credit are deductible. The company does have to keep extensive records to prove that these things were only used for expenses that were business related.
A few very commonly missed deductions for companies are related to their networking expense. Most small businesses need to build connections to be successful. The IRS also allows write-offs for business gifts sent to clients, trade show attendance, and dues for professional associations.
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This article also provides links to other outside sources that small business owners could use to help prepare their taxes.