There are a ton of expenses that can eat into your profits and if you do not track them, they can leave you with a bigger tax bill.
I’m not quite sure anybody is a big fan of Uncle Sam when tax season rolls around.
If you are a business owner and you were profitable that year, you’ll absolutely owe some taxes to the government. You can reduce the amount of tax you owe with the help of a “write off”. A “tax write off” is slang for an expense that you may be able to deduct from your federal income tax return.
Tax write-offs are a business expense people use to deduct expenses and reduce the amount of income they make on paper. This essentially takes down the amount of income they have to pay in taxes.
Use a self-employment tax calculator and add up how much you owe. You might want to look into these five little known tax write-offs you may not be writing-off from your tax bill.
- Employee Training/Education
Keeping your employees sharp is essential to the growth of your business. That is why you should be constantly investing in sharpening their skillsets. If you or your employee purchases a training course, conference, or even a networking event, you can add the purchase as a deductible expense when you file taxes.
You could deduct costs for business magazines, professional journals, and educational books.
To determine if you can deduct a training expense, decide if the expense is both ordinary and necessary to the business.
The IRS requires both of these elements.
- An expense is ordinary if it is common and accepted in your industry.
- An expense is necessary if it is helpful and appropriate for your business.
If they are and the expense does qualify, write them off from your tax bill.
- Vehicle Expenses
Vehicle expenses may seem a bit tricky because you usually use your car for both personal and business reasons. You just have to keep really good records of when you use your car for personal purposes and business.
When tax time comes, you can pick to deduct expenses by using the IRS standard mileage rate or by the actual expenses (tolls, car maintenance, gasoline, parking). So, if you are constantly traveling by your car or using it for deliveries in your business, track the mileage and how it compares to the actual expenses.
It makes more sense to use the standard mileage deduction when filing taxes if you drive a lot of miles each year for business.
- Janitorial Supplies
If you hire any type of cleaning service or purchase janitorial supplies to clean your work office, make sure you take your small business tax deduction. This is regardless of the type of business you operate.
Whenever you sustain any cleaning costs in a business context, it is entirely deductible. The reason for this is because cleaning and janitorial expenses are necessary to keep office space or storefront.
They fit the IRS’s guidelines of necessary and ordinary.
You can still deduct the cost of the cleaning supplies you used even if you run your business from home and do the cleaning yourself,
- Business Credit Card Payment Fees
If your business accepts credit cards and gets tackled with credit card processing fees, you can deduct those transaction fees from your business. Although payment costs are a small percentage, they can really add up and hurt your profits.
So do yourself a favor and deduct them from your tax bill.
In fact, you can write off any expenses that may be derived from your business credit cards such as annual fees, and late payment penalties.
- Charitable Donations
You can write off expenses for donations of supplies, property, or money to a recognized charity.
You have to be careful with this though because this does not mean you can donate your tax bill to charity. The IRS has specific guidelines for what qualifies as a donation to charity.
What qualifies for charitable giving is the following: cash donations, property such as inventory or equipment, and sponsorship of local charity events. It should be noted that you cannot donate your time as a tax deduction i.e. if you help a charity and typically charge $150 an hour, you cannot write off your served time.
Again, please be diligent in your research to make sure your donation qualifies as a tax write-off.
Let’s Save Some Money!
It can cost you a lot of money to run your own business.
There are a ton of expenses that can eat into your profits and if you do not track them, they can leave you with a bigger tax bill. So, stop paying more taxes than you need to. Talk to an accountant or tax specialist about the other deductions you can make to lower what you owe at the end of the year.