Business Deductions You Should Not Forget When Filing Your Taxes
We Are In Tax Season! And we are here to guide you along the way. More money in your pocket, who doesn’t want that? It is important that you understand what you can deduct and claim when you file your taxes. We do not want you to overpay taxes, and we also understand that deductions can be the difference between making or losing money on your business.
Here are some deductions that business owners sometimes forget, at CPA by Choice we never forget them:
Business use of your home
We know many business owners used their homes this year due to working remotely because of COVID19. According to the IRS, if you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. In addition, if you use an extra room to run your business, you can take a home office deduction for that extra room. For specific guidance refer to Home Office Deduction.
Business use of your car
If you use your car in your business, you can deduct car expenses. Some of our clients use their car for both business and personal purposes, in this case you must divide your expenses based on actual mileage.
Business Startup Expenses
2020 may have brought out your entrepreneurial side, or you decided it was the best time to bring to life your business idea. Therefore, you started a new business, and incurred expenses such as analysis of market, advertising, rent, telephone, office supplies, travel expenses while looking for a location, and/or utilities. You can elect to deduct up to $5,000 of business start-up. As a new business owner, we recommend keeping good records on all costs related to startup.
We will bring back one of the most used words in the last year again, pandemic! The pandemic caused many business owners to invest in electronics, tech, and supplies. You can write off computers, laptops, tablets, video conferencing cameras, speakers, or supplies you used for your business. As long as you can show that it was used 100% for the business, you can write it off (certain items can be prorated based on percentage used for business versus personal). These expenses tend to be large and we want to make sure you take advantage of this deduction.
Some business owners often forget the smaller expenses, we will list some miscellaneous expenses that can certainly add up:
Bank fees and charges
Club memberships (yes, your Costco business membership can be deductible)
Training for your employees
Petty cash (for example, reimbursement of an office supply an employee purchased)
Subscriptions to professional journals
Business credit card fees
Postage stamps used for your business
Last but not least, fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. At CPA by Choice, we keep track of all business deductions. We are available to answer your questions, feel free to call us or send us a message.