Save money for your business by taking advantage of these five commonly missed tax deductible expenses for your home startup or small business. Start cutting back on the taxes your business has to pay every year and let the government work for you!
Before we get to the list, it’s important to note that expenses must be both ordinary and necessary in terms of your business. In order for an expense to be considered ordinary, the expense must be common and generally accepted within your industry or line of business. A necessary expense is an expense that is beneficial to your business and helps you run your business. Don’t mistake the word necessary for meaning something your business can’t operate without. According to the IRS, necessary in the context of tax deductions means anything that is helpful and appropriate for your business. Now let’s get started.
1. Home Office Deductions
If you primarily operate your business from your home, you’re legally able to deduct some of the expenses, including your home mortgage interest, insurance, utilities, repairs and depreciation. The only requirement is that you use these deductible portions of your home or apartment exclusively for conducting business, nothing else. You may also be able to qualify for deductions if you use portions of your residence regularly to conduct business operations, even if your main office is located somewhere else. All you have to do is provide proof that your place of residence is your principle place of business. Operating your business out of your home or apartment is a great way to save money on quite a few business expenses.
2. Business Advertising & Promotion
Advertising and promotion is almost essential for all businesses to become successful. These expenses are deductible as well. Not only are they just deductible, but the entire cost of advertising and promoting your business is deductible. Deducting these expenses can save your business tons of money in the long run. Makes you want to invest more money in marketing your business, doesn’t it?
3. Legal Fees
Legal fees are tax deductible expenses as well. The general rules for deduction of legal fees is that the legal services either directly help you produce more taxable income (more money for your business, incorporating a business for profit, etc) or the legal fees are used to assist your business in determining, collecting or receiving tax refunds. Nearly every business owner pays legal fees at one time or another so it’s good to know that these expenses are tax deductible.
4. Internet Subscriptions
In this day and age, most businesses have expenses tied to the Internet in one way or another. All of these expenses related to the online aspects of your business are tax deductible as well. These expenses include your monthly Internet subscription, domain name registration, web hosting plans and more. If your business has any connection to the Web at all, there are some easy tax deductions to take advantage of.
5. Accidental Banking Fees
It’s bad enough that banks charge us to use their services. Additional banking fees tend to make the situation even worse. Nobody likes harsh overdraft fees or additional service charges that are caused on accident, except maybe the executives at the banks. The fact is, everyone makes mistakes every once in a while. It’s good to know that these additional banking expenses are tax deductible in case you ever get hit with extra banking charges. Additional services used for your business such as safety deposit boxes are deductible as well. Finally, we have something in our back pocket that acts in our favor when it comes to small business banking.