Once your business doors are open and business transactions are happening, all expenses would be considered traditional operating expenses. Just remember, a startup expense only counts if it's an expense made during the development and planning phase of your business. Startup expenses can be deducted once the business starts. The following deductions can be tax deductible for the entire cost in the year of the purchase or depreciated over several years. There’s also a tax deduction for auto maintenance, parking, and tolls. Whether you're using your car or a company truck, you can deduct the cost of operating the vehicle, as long as you have the records to prove the vehicle was used for business. In addition, any contributions you make to employees' profit-sharing and pension plans are tax deductible as well. Employee DeductionsĮmployee benefits such as health plans and life insurance are tax deductible. For example, if you bought a $100 gift for two clients ($200 total), you would only be able to deduct $50. When it comes to employer or client gifts, you’re only allowed to deduct $25 for a gift you gave to each person during your tax year. Purpose of the entertainment was in fact business, and business was discussed.Entertainment took place in a business setting.Fees are paid or acquired during the taxable yearīelieve it or not, you can deduct expenses for client entertainment – as long as it passes the directly-related test.Service fees are acquired when carrying on a trade or business.Professional service fees are typical and necessary.In addition, professional fees for accountants, consultants, and lawyers are all deductible – just as long as you follow a few guidelines: Well guess what? Those services are tax deductible!Ĭontractor and freelancer fees can be deducted as a business expense. When you're running a business, you rely on a lot of professional services outside the office. The following tax deductions are for established small business owners Professional Service Deductions However, if you're a business owner, one of the perks is that you have a lot of tax deductions at your fingertips that will help you save.īelow, we list and explain important tax deductions you should keep in mind. Tax season is synonymous with owing money. Whether you're an established business owner or just in the beginning stages of running your business, saving every penny matters. Tax Deductions The Deductions Small Business Owners Should Know
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