Tax Savings Opportunities for Small Businesses

If you are a small business owner, then you probably won’t turn down tax savings tips. One of these tips is to claim all the deductions you can on your taxes each year.

Unless you are able to completely wrap your mind around the inner workings of taxes, they can be confusing, stressful and, in some cases, done wrong. After all, doing your taxes is a complex process—although you would think that after years of filing you would be a pro on the subject! Luckily, there are tax service providers that specialize in small business taxes, as well as a wealth of knowledge on the Internet just waiting to help.

Now, as a small business owner, did you know there are a number of deductions you may qualify for? Whether you typically hire a third party for yearly tax preparation in Des Moines, IA or do it yourself, the following are some of the types of tax deductions small businesses can take:

  • Taxes: As a small business owner, you can deduct licenses, regulatory fees and taxes on real estate and personal property. Furthermore, employer taxes like FICA, FUTA and state unemployment taxes can be deducted. But if you’re a self-employed business owner, keep in mind that not all your self-employment tax is deductible—the deduction for half of it is not a business deduction. What it is, rather, is an adjustment to the gross income on your personal income tax return.
  • Insurance: There are a few types of insurance related to businesses that are fully deductible—including malpractice coverage, your business owner’s policy and business continuation insurance. When it comes to health coverage, a small business might be able to claim a tax credit (not a tax deduction) that’s no more than 50 percent of the premiums.
  • Home office: If you work out of an office in your home, make sure to take all the deductions you can—but only a portion of your personal expenses associated with your home will qualify as a business expense. You must regularly use the office for business, like for doing actual work, meeting clients or dealing with customers. Things you can partially deduct include the square footage of the office, phone and internet use, and office equipment, furniture and supplies.
  • Travel expenses: The cost of transportation and lodging is fully deductible for employers and their employees who travel out of town on business. Your claims must meet IRS requirements before any of your business travel can be deducted.
  • Employee wages: There are two types of salaries and wages within a small business structure. There are payments taken from the business that are made to sole proprietors, their partners and LLC members, but those are not salaries, and therefore, not deductible. However, salaries and wages paid to employees are deductible.

Tax service providers like Accounting & Tax Professionals, PLC are ready to help you through all the steps of tax preparation in Des Moines, IA. Contact our friendly team today to learn more about small business tax deductions or to schedule an appointment time!

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