Last week I talked about what “writing something off” actually means – particularly that it doesn’t mean FREE money from the government. 🙂
So what are the business expenses that will reduce your tax liability?
- Legal and accounting fees – the people who do your books and your taxes help you save money on taxes! Who’dathunk
- Travel – mileage and parking fees to see clients, pick up supplies, educational conferences (which must be related to and beneficial for your business).
- Vehicle expenses – IF you have a vehicle you use strictly for business and that is owned by the business, you can write off repairs, auto insurance, and the interest from your auto loan (not the principle). If you LEASE, you can write off the entire lease payment.
- Office supplies and equipment – printers, printer paper, ink, pens, notebooks, paperclips, etc.
- Taxes & Licenses – LLC filings, certificates of good standing, business licenses; property, sales, and income taxes.
- Advertising & promotion – marketing materials, Facebook ads, social media consultants, etc.
- Business insurance – general, liability, cyber, errors & omissions, worker’s compensation.
- Employee benefits/health insurance – including your own.
- Charitable Donations
- Relevant professional education, training, and certification
- Rent and utilities for your brick and mortar store.
- Home office – If you are working from home, you can either take the standard home office deduction ($5 per square foot with a maximum of 300 square feet), or a percentage of your home expenses – mortage interest, property tax, utilities, insurance, etc. – equal to the percentage of square feet your office space occupies in your house. (For example, my home office takes up 6% of the square footage of my home, so I can deduct 6% of the home expenses). It doesn’t sound like much, but it adds up!
- Salaries & wages – to employees AND contract workers
- Retirement plan contributions – for your employees for sure. You can also deduct certain kinds of your own retirement contributions, depending on what kind of plan you contribute to. This is something to talk to a financial planner about.
I urge you to do some research on items you’re not sure about at the irs.gov website or with a qualified tax preparer. Whatever you do, don’t get creative without guidance. Reducing your tax liability is great, but you know what isn’t great? Audits, penalties, and jail time.
Get the most of your deductions while still following tax code. As badass as you are, even Al Capone was brought down by tax evasion!