When it comes to the company tax return, every small business owner yearns to save a large sum of money. However, evaluating receipts and invoices while filing taxes won’t help you to satisfy your needs. You need to consider some tax deductions of your business that can help you to lower your tax liability by reducing your taxable income.
A professional tax preparer or tax accountant must be well-aware of these tax deductions. But, many small business owners prefer to manage their taxes on their own, and they might not know these common tax deductions that can save their money. So, here is a guide to common tax deductions for small businesses and how to take their advantage to save money.
Using Vehicle for Business Purposes
You can use your vehicle for business purposes to get huge deductions on your taxes. Keep track of the usage of your vehicle for both professional and personal purposes, though be careful and don’t mix them.
Consider maintenance, gas, parking, and tolls when it is time to pay taxes to deduct your taxes and save your money. Moreover, you may also use the IRS standard mileage rate, especially if you drive a lot of miles each year.
Besides, you may get more deductions if your vehicle is not fuel-efficient or requires regular maintenance, by keeping your actual expenses against the IRS mileage rate.
Conducting business from Home Office
Though it is one of the most complicated tax deductions, it is widely used by small business owners to save their taxes. If you are using a part of your house for your business or have a home-based business, then you are liable for this tax deduction.
However, don’t get the impression that doing your business work on your bed or at your coffee table would make you accountable for it. You will be required to dedicate a part of your house to your business and would also need to work from that part of the house regularly.
Keeping Employees Happy and Satisfied
The wages or salaries that pay to your employees are also used for deducting your taxes. Apart from standard wages, other payments like allowances, meals, and bonuses are also deductible.
Furthermore, you can also take advantage of the benefits offered to your employees by your company, such as pensions, insurance, education or skill development programs/training, profit-sharing, social activities, and many more. So, by keeping your employees satisfied with your offerings, you can save your taxed amount.
Counting the Travelling Expenses
If you are traveling for the sole business purposes, then you can reduce your taxable amount to a great extent. If you are out on a business trip for more than a day, you can document your meeting, purpose of travel, and days of return, to get a nice deduction on your taxes.
You can get a deduction on varying traveling expenses from airfare, accommodation, automobile to food. Besides, you can claim a tax deduction for costs that might not strike you at first.
For example, the cost of making calls, shipping items, or any other expenses that you made on your trip. It is better to keep a record of all your business travel expenses to avoid any error.
So, these are the common tax deductions that can provide you monetary advantages by allowing you to save your money on your taxes. However, even though now you know them, deducting taxes can be a little tricky. Any error can land you in huge trouble and may even cost you more.
So, it is recommended to hire tax accountant services. A professional and experienced tax accountant knows many more ways to reduce your taxable income. They can lodge your company tax return and perform audit efficiently, without any error. Hire them and get the most out of your taxes!