Tax deductions are a small business's best friend. It's much more expensive to run a small business than many people think due to the taxes that have to be paid. Most people are only familiar with paying their own income tax, but small businesses have to cover many different taxes, including the Social Security tax for everyone that works there. If you own a small business, you might feel like you are drowning in taxes. Here are some possible deductions that you should consider to lighten this load.
1. Office Supplies
If you own a small business, chances are good that you are going to need to communicate with the outside world through snail mail on occasion, brainstorm by writing ideas down on a whiteboard, and print things out. As a result, you are going to need to buy envelopes and stamps; whiteboard markers, erasers, and cleaning solution; and printer paper and ink. All of these different office supplies can add up. You are able to deduct these office supplies from your total income at the end of the year because they are absolutely critical for your business's success.
2. Paying Your Kid to Help Out
If you have a child that is assisting you with running your small business and that child is under 17, you are able to deduct any money that you pay him or her as a business expense. This only works if you are the sole proprietor or you and your spouse are the sole proprietors. There is no Social Security tax that you have to pay on behalf of your child if he or she is underage. If you keep the amount that you pay your child relatively low, you can easily deduct their salary.
Many small businesses have to purchase software subscriptions in order to properly keep track of their costs and income in order to plan for the future. Other businesses might need other types of software. Graphic designers might need to purchase photo editing software and 3D modeling software. Engineers and contractors might need to purchase software that will allow them to mathematically model their plans. Before, you had to depreciate the cost of the software over the course of three to five years, but now you are able to simply deduct the entire thing the first year you buy it, as long as your total equipment costs remain below $200,000.
For more information, talk to a company that specializes in business tax preparation.Share