Tax deductions can be a big-time assistance for small business owners who need to cover the costs of running their company. Therefore, it’s important to be diligent with tracking your business expenses throughout the year so you can more thoroughly and accurately itemize on your tax return come the spring.
Here’s some information from our tax preparation service in Des Moines, IA about the business expenses you can itemize:
- Vehicle expenses: Many small businesses use vehicles, such as vans, pickups or cars. The cost of operating the vehicle for business purposes is deductible if you have records proving it is used for business. You can also use the standard mileage rate to deduct the mileage used for business-related travel with that vehicle.
- Contract labor: Many small businesses depend on freelancers and independent contractors to get a lot of their projects done. The cost of contract labor is deductible. You just need to make sure you issue Forms 1099-MISC to all contractors who will receive at least $600 from you in a given year.
- Depreciation: The depreciation of value of any property used by your business can be deducted on your taxes up to a certain dollar limit.
- Supplies: The costs of various items you use in your everyday business operations, such as stationery, postage, paper, pens, printer ink and more, are fully deductible expenses. Once again, these items must be used for business purposes.
- Rent: If you rent space for your business operation, the cost of renting that space is fully deductible on your business’s taxes.
- Wages and salaries: The payments you make to your employees, which include wages, salaries, commissions, bonuses and any taxable fringe benefits, are all considered deductible business expenses for your company. Payments to LLC members, sole proprietors and partners are not considered wages for these purposes, because owners of the company are not employees.
- Utilities: The money you spend on your monthly utility bills is fully deductible, as are utility costs such as mobile phone charges (for business phones only). If you have a home office that has a dedicated landline for business purposes, the cost of that second landline is deductible, but any first landline is not deductible as it is considered the residential landline.
- Insurance: As a business owner, you likely have a variety of insurance policies to protect your business from malpractice claims, floods, property damage, business continuation issues, liability issues and more. The costs of these policies are fully deductible. You may also qualify for tax credits for some of the money paid on behalf of employees for their own insurance coverages.
- Repairs: The costs of maintenance and repairs to your business property are fully deductible.
These are just a few examples of some of the deductions available to business owners who opt to itemize their business taxes. For more information about some of these available deduction opportunities, we encourage you to contact the team at Accounting & Tax Professionals, PLC about tax preparation in Des Moines, IA. We look forward to working with you!