11 Small Business Tax Deduction Tips You Can’t Afford to Miss

With the April 15 tax deadline fast approaching in the United States, we thought we would take a look at 11 commonly overlooked things you can write off on your taxes. The IRS’s list of small business tax deductions is extensive, but we are narrowing it down to focus on things you might not know about.

Even if you have already submitted your tax return, it is not too late to send in an amended version. Remember, save your receipts – you will need them. Here we go!

small business tax deductions

11 Simple Tax Deduction Tips from PandaDoc

Small Business Tax Deductions Tip #1: Home Office Deduction

Number one on our list is the home office deduction. You can claim the square-footage that you use for business purposes (only!) as a deduction. In the past, many people overlooked the home office deduction, or simply skipped it, because it took some serious calculations to figure it all out. The regular deduction method lets you deduct the cost of rent or mortgage payments of rooms used exclusively for business, as well as utility, interest, repair, and insurance costs.

To the benefit of many filers, though, the IRS has introduced a simplified home office deduction, allowing filers to claim up to 300 square feet (or $1500).

Small Business Tax Deductions Tip #2: Non-cash charitable deduction

Most people know that you can write off charitable cash contributions to 501C organizations, but you may not know that you can write off non-cash donations. The next time you drop off some old clothes at the local thrift store, do it during business hours, and ask for a receipt.

Before you drop off anything, write out a list of things you are donating, that way, in the event of an audit, you can justify claiming to have deposited a Tom Ford suit at the local Goodwill, if you really did! Just remember to consult with this advice on “fair market value.”

Small Business Tax Deductions Tip #3: Insurance premiums

With Obamacare in full effect and practically everyone in America paying insurance premiums (well, that is one way to put it, is it not?), there is a whole lot of tax money to recoup. The deal is, Panda Pals, you have to be self-employed or otherwise not covered by an employer to be able to claim 100% of your insurance premiums. The IRS outlines the whole process on its website.

Small Business Tax Deductions Tip #4: Other Healthcare costs

Speaking of your health, you can write off all sorts of healthcare expenses on your taxes.

Here is a short list of just some of the many healthcare expense you can write off on your taxes:

  • Doctor visits

  • Dental visits

  • Treatment for alcohol or drug addiction

  • Insulin costs

  • Smoking cessation program fees

  • Weight loss program fees

Many things can be written off, in addition to these. You simply have to have records for all procedures. You also cannot deduct costs reimbursed by insurance of any kind (including Medicaid).

Small Business Tax Deductions Tip #5: Entertainment and meals

Yes, you can write off business lunches, dinners, and parties. This, however, does not give you license to become Don Draper and Co. that time Lee Garner, Jr. demanded a “par-tay.”

Unlike the Mad Men crew, you have to be able to justify your indulgences in the unfortunate event of an IRS audit. Make sure you save receipts, and that they do not show that you downed a bottle and a half of tequila and had three servings of caviar before your filet mignon), with your significant other and Ted from accounting, thus making it a “business dinner.” Admittedly, that sounds like a night that would not end well.

Be sensible, and definitely do some business while you are entertaining!

Small Business Tax Deductions Tip #6: Prizes given away in contests

Everyone is gamifyng everything in the world of business these days. As a result, there are many prizes being handed out. Those free iPads and GoPro cameras do not just fall out of the sky. If you pay out of pocket for prizes for your customers, you can write them off on your taxes because such prizes are advertising expenditures.

Keep in mind, this differs from gifts given to customers.

Panda Tip: If you purchase a prize with your advertising budget, you cannot deduct it twice along with your advertising total.

Small Business Tax Deductions Tip #7: Website design

Many freelancers and small business owners hire a web designer to take care of their websites for them. That is a smart move, though it is one that is often forgotten by the time tax season comes around.

You can actually write off a variety of expenses centering on your website, its creation, and its promotion. If you hire a graphic designer to create a logo, write it off. If you hire a search engine marketer to juice your search ranking, write it off. Even monthly or yearly hosting fees and various other tech expenses are tax deductible!

Small Business Tax Deductions Tip #8: Business travel

Travel is a bit complicated. To receive a deduction for business travel it has to be for work-related reasons and far away from where you normally live and work.

The IRS gives the following examples on its website:

You live and work in one city for eight months of the year; a distant city, four. You can claim travel and housing expenses for the distant city.

Small Business Tax Deductions Tip #9: Software and online services

Are you using online applications to run your business (like Wufoo Pro, Asana, or MailChimp)? You can write off all those subscription fees that accumulate throughout the year.

If you think about it, that makes putting your business up in the clouds effectively free, after you file your taxes.

As if we needed another reason to love the digital space!

Top 25 Ways For Small Businesses To Save On Taxes Today from Fit Small Business

Small Business Tax Deductions Tip #10: Bad debts

It is no fun, but it happens. Bad debt is a reality for most businesses.

You do the work, send the invoice, and nothing happens. You send payment reminders. Nothing comes in the mail in return.

If you have ever heard the expression “write off the debt,” you are familiar with this deduction. When a payment is severely delinquent, it can be deducted from your yearly income. That is something, at least.

Small Business Tax Deductions Tip #11: Business association fees

Yes, you can write off business association fees. Just file them under “other expenses.”

No, you cannot write off country club dues. Do not even ask!

Did you save your receipts?

If you are thinking, “Dang! I forgot to save my receipts for that…” why not take our favorite piece of advice and scan your receipts to put them in the cloud?

How are you feeling this tax season? Are you sweating it or resting easily? We would love to hear from you in the comment space below!

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About

Todd Spear is a freelance blogger and journalist. He's helped media outlets and brands alike connect with their audiences. He's a regular contributor to Anthill Online, the Quote Roller Blog, and Naluda Magazine, among many other sites. You can connect with Todd via his website www.toddspear.net

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  • Daniel Taylor

    I am a freelance writer who primarily sells blog posts to small business owners. Is my work deductible FOR THEM?

  • The Nanny Rules

    My small business (and kids amusement rental co) offers discounts to qualifying non-profit charitable organizations. Is the dollar value of these discounts tax deductible? If not, how do we offer discounts to churches and claim the dollar value (listed on each invoice) on our taxes?

  • Brian Lackey

    If I sell something at a discounted price (sale price) is there an income tax deduction associated with the loss (potential) revenue.. i.e. Price $100 sale/MAP price $90.00 is the $10 difference a deduction?

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