Are you a small business owner or entrepreneur? Maybe you’re stuck in a corporate job, wondering if you’ll ever be able to afford to start up the business that you’ve been dreaming about. Well, no matter where you are along the process of starting a business, you need to know about one of the best tricks for business financing: business expense write-offs. There are lots of different business expenses that you can write off in your taxes to make your business venture a lot more affordable.
Home Office Space
In 2020 and 2021, many small businesses have started creating at-home workspaces where business owners can work remotely. Especially as a business owner working out of your home office space, it is important to keep track of your spending that goes into your home office. There are a few rules that determine how many deductions your home workspace will qualify for. One easy calculation for the deduction that you earn by working on your own property and using your own space is performed as follows: Multiply $5 with the square footage of your home office. (up to 300 sq. ft.) However, the area being calculated must qualify as your work area that is regularly and exclusively used. It can’t encompass different areas of your house.
One thing that many business owners forget is that a lot of your business office supplies can also qualify as write-offs. Your business equipment like desks, chairs, computers, printers, organizing cabinets, etc. could even qualify as a tax deduction. You can even deduct postage and shipping supplies. The only requirement for each of these deductions is that you use those office supplies that you’ve deducted during the indicated tax year.
If your job requires you to travel often, you could qualify for certain travel write-offs in regard to your travels. You would be able to deduct and write off parking fees, business calls, baggage shipping, lodging, meals, dry cleaning, transportation by taxi, car, bus, train, or plane, and other expenses. To qualify for a tax deduction for your business travels, these have to be regular demands that take you away from your tax home, which is the area where you usually work.
In addition to traveling in general, you will want to think about the transportation that you use while traveling, as you may qualify for additional write-offs. If you are traveling often from workplace to workplace, you might be able to deduct oil and gas costs. However, you won’t be able to deduct maintenance or repairs on your business cars, so you’ll want to make sure that you take special care of your business vehicles. For example, using ceramic coating prevents scratches and other damage to your vehicle. This can help lower your transportation expenses while allowing you to qualify for write-offs.
In most situations, you should be able to write off about half of your business food costs, given that they meet the deductible requirements. The rules of food deductions require that your meal expenses must be a normal, routine part of your business environment and schedule. In addition, a business employee or owner has to attend the meal for it to qualify. Meal deductions also require that the meals and beverages be regular food at a reasonable price. Extravagant parties or lavish food spreads do not qualify as being deductible. As far as meals that are for employees only, 50% of the total cost can be deducted. If the meal is for an office event, 100% of the costs will be deductible.
If your business requires you or your employees to be constantly gaining and improving new skills, you may want to look into the possible write-offs for business education. There are lots of different educational opportunities that could qualify as deductibles. Seminars, classes on specific skill sets, educational books, and specialized workshops all qualify as education write-offs. You might even be able to get your transportation costs deducted, which is a huge plus if you’re looking to travel to a different state or country for a conference or seminar.
There are a few different circumstances having to do with the location of your business that could qualify you for a business deductible. For example, if you rent a space for your business, you can write off your rent payments as a business expense deductible. That being said, the same rule does not apply if you are renting a home where you work. If your work requires you to move to another location, you can qualify for a deduction of your moving expenses including equipment, labor, and supplies.
If you’re working at home and have one landline, you wouldn’t be able to use it as a write-off, since you will also use it for personal use. Only your second landline would qualify as a deductible. As far as cell phones go, you will be able to deduct a portion of your cell phone bill as a business write-off, but only the portion that qualifies for use specific to your business or job. For example, if you use your phone or internet connection about 50% of the time, then that should be the percentage allocable for a business tax deduction.
There are so many different elements of running a business that can be expensive. Often, your bills or taxes may seem a lot larger than the profit that you make. This is why so many dreamers have ideas that never get made into businesses. However, now you know that there are many different kinds of business expenses that qualify as business write-offs, which could save you quite a bit of money. You won’t have to give up your business dream for fear of financial failure.
Take the time to go back through each of these deductibles and determine how your personal business could qualify for them. Make sure that you’re educated about the different deductibles that your business qualifies for, and you’ll be on the quick road to financial success.
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