The New Year offers so many new beginnings, opportunities, hopes, and dreams in the upcoming 12 months. People are setting resolutions to get fit, and businesses are planning new product launches to make their business grow bigger and better. However, with the turn of the calendar year comes one annual event that most businesses dread: tax season. No one likes paying taxes despite the altruistic intent of some of them. Let’s be frank: taxes cut into the bottom line of most businesses, and especially small businesses. Paying taxes in fact can be a struggle for many and even can be the tipping point if a small business survives or folds. That’s why tax write-offs for small businesses are so important. Without tax write-offs, more small businesses would fold than those that already do.
The International Association Of Credit Engineers, a company that helps small businesses thrive by providing credit capital and credit consulting services, want to make sure small businesses have every available resource in order to beat the odds and survive, grow, and prosper. Our credit capital program provides monthly access to cash flow, and our credit consulting program provides lump sums in order to launch your new product line or open the doors to the idea that has been germinating in your heart for years. Below, we offer up the most common tax write-offs for small businesses.
THE MOST COMMON TAX WRITE-OFFS FOR SMALL BUSINESSES
- Vehicle expenses. If you use either a car or truck for business purposes, you are allowed to write off the cost of operating the vehicle. However, documentation must be kept unless you choose to go with the IRS’s standard mileage rate (54.5 cents per mile in 2018) instead. This rule applies whether you own the vehicle, lease the vehicle, or borrow Grandma’s instead — as long as it’s business related.
- Salaries and wages of employees. All forms of payment to those who work for you (salaries, wages, bonuses, commissions, and taxable fringe benefits), are deductible business expenses for the business. This only applies to actual workers who are paying into the social security system and receive a paycheck. Sole proprietors, partners, and board members aren’t included.
- Contract workers. Those workers’ wages whom you hire occasionally and pay as a contractor are also tax deductible. For a small business owners, this may be the majority of their workforce. Just remember if you pay them over $600 in a calendar year to send a 1099-MISC form out, so they can report their wages to the IRS and pay taxes on that income.
- Business supplies. These are supplies you need to operate, which can vary depending on what type of business you own. If you run your own cleaning business, then the cost of paper towels and toilet bowl cleaner are tax deductible. Don’t forget postage costs, which is also considered a business expense. You can also choose to deduct the cost of tangible business property (such as vacuum cleaners) instead of depreciating them.
- Depreciation. You can partially write off the cost of property and other assets such as farming equipment based on what’s allowable for the tax year.
- Rent. This is the rent for your business’s physical location.
- Utilities. Electricity is tax deductible as well as the monthly charges for your cell phone. Other utilities may be deducted as well.
- Taxes. On your taxes, you can deduct your taxes. These taxes include: licenses, regulatory fees, real estate taxes, and personal property taxes. Your employer taxes, including the employer share of FICA, FUTA, and state unemployment taxes, are fully deductible business expenses as well. However, if you are self-employed, the deduction for half of your self-employment tax is not a business deduction; it is an adjustment to gross income on your personal income tax return. This prevents the duplication of tax write-offs for sole proprietorships.
- Insurance. Insurance for businesses is fully deductible. This includes your business owner’s policy, malpractice coverage if you’re a medical professional such as a chiropractor or a doctor, flood insurance, cyber liability coverage, and business continuation insurance. Health insurance for your employees can be a tax credit claim up to 50 percent of the premiums paid for employees (a better tax break than a deduction). If you’re self-employed, this would fall under your personal taxes.
- Repairs. This is repairs to your business’ building, such as to fix a leak in the roof or a stair indoors. If you are improving the property, this expense would be capitalized and depreciated.
- Business travel. Any trip taken for business purposes allow the lodging and the transportation costs to be tax deductible. This would include for the purpose of obtaining credit capital through The International Association Of Credit Engineers’ incredible credit capital solutions and credit consulting program that grants you unprecedented access to massive credit and capital.
- Advertising. Advertising costs are tax deductible, so sponsor your kid’s basketball team!
- Home office. If you operate mainly out of your home, you can write off a portion of personal expenses as a business expense as long as the room that is designated at a home office is used exclusively as a home office or as a place to meet clients. Both direct costs (painting the office) and indirect costs (a percentage of your rent or mortgage and real estate taxes) can be deducted.
- Legal and accounting fees. This is one reason (besides to maximize your deductions) to hire an accountant; you can write off his or her expenses as well!
- Meals. Some meals used for business purposes can be written off up to 50 percent of the cost.
- Rent on machinery and equipment. If you own a construction business and need to rent a Skid loader, that’s tax deductible. This tax write-off includes all the equipment or machinery you’d need to function.
- Interest on business loans. Interest on loans you take out for the business is tax deductible. This applies to small businesses under $25 million in annual gross receipts for the past three years combined. Interest on loans to buy a business versus interest on investment real estate property is treated differently.
- Employee benefit programs and employee retirement programs. The cost of these benefits as well as contributions make on the employee’s behalf are tax deductible.
- Mortgage interest. This would be businesses who own real estate (such as real estate firms) that can fully deduct the mortgage interest.
WHY CHOOSE International Association Of THE CREDIT ENGINEERS FOR CAPITAL FINANCING
If you use The International Association Of Credit Engineers for credit capital solutions or credit consulting, you can deduct the interest on the loans taken out on your behalf. This ultimately results in more money in your pocket as you not only get the funds to use, but you’ll get a break on the funds because it’s used for business purposes. This usually applies to all interest on loans taken out for your small business.
The International Association Of Credit Engineers are passionate about helping small businesses succeed. One mistake many small businesses make is not hiring an accountant well-versed in tax deductions for businesses to do their taxes. A professional accountant can save a small business thousands of dollars that ultimately could be reinvested back into the company as capital.
Owning a business is no walk in the park. Financing a business, especially initially, is probably the most challenging, ongoing aspect of business ownership. It takes a certain individual to see the business ownership aspect through to the end. Tenacity, hard work, passion, and dedication to your product and/or service are hallmarks of business owners. The government allows businesses many tax deductions in an effort to see them succeed. Taking advantage of every tax write-off you can is not only prudent, but is also necessary for survival in a tough marketplace.
The International Association Of Credit Engineers offer programs to help you obtain credit capital. We believe too many businesses fail not because they have a bad idea or don’t work hard, but because they lack the knowledge and the help they need to survive. The International Association Of Credit Engineers have developed a program to get you access to an incredible amount of capital financing to help your business grow and prosper for years to come. Our programs can be repeated over and over in order to gain the new rounds of financing you’ll need as your business expands. The International Association Of Credit Engineers are here to help because we care. Visit our Facebook page (called Creducation) to learn a wealth of knowledge about credit and how you can leverage it in your business. Contact us today to get started.