Top 10 small business tax deductions

Owning and operating a small business comes with a wide variety of responsibilities and benefits; around tax time, those benefits can add up. For small business owners, there are 10 everyday business expenses that are at least partially tax-deductible.

1 – Startup expenses

The money you spend on starting up or expanding your business is tax-deductible. This cost is deductible only during the first year of your business, otherwise it is not deductible until you sell or liquidate the business.

2 – Professional dues and publications

Many professional organizations charge a fee or membership for belonging to the organization or receiving their publication. These dues and charges are deductible as an amortized cost over the lifetime of that membership.

3 – Entertainment and meals

Whenever you take clients or potential clients out to a meal or drinks or coffee, it counts as a partially deductible expense. Keep careful records of who you met with and what you talked about.

4 – Communications

Expenses for dedicated phone and internet connections are entirely deductible. If you use your home phone and internet for business, the expenses are partially deductible.

5 – Charity donations

These donations include not only money, but time and inventory.

6 – State taxes

The state taxes you pay are deductions on your federal taxes as long as you keep meticulous records.

7 – Home office

Home offices are deductible from your taxes, but only if the home office is used exclusively for business purposes. Dual-use rooms, such as spare bedrooms or living rooms that double as offices, do not count.

8 – Software

Any software that you purchase for use at your business is deductible one of two ways: as a single deduction for a piece of software that is used just for one year, or amortized over the life of the software – usually assumed at 3 to 5 years.

9 – Advertising and marketing

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Sample product that you hand out, business cards, advertisements, promotional parties or mailing expenses all could count.

10 – Automobile expenses

You have the option of tracking automobile expenses one of two ways. If you track actual vehicle expenses, it should be for a vehicle that is used exclusively for business. Otherwise, record vehicle miles traveled for business and take a mile-based deduction.

Check with a tax accountant

It is always the most financially sound decision to check with a tax accountant or attorney for any questions you have related to your taxes.

Sources

IRS.gov
Entrepreneur
Forbes