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Small Business Guide To Overlooked & Uncommon Tax Deductions

A guide that helps small business owners avoid tax mistakes and act on opportunities that can save them money.

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Small Business Guide To Overlooked & Uncommon Tax Deductions

  1. 1. Check online for updates, as tax laws are constantly changing. Keep receipts and documentation when possible. Uncommon Tax Deductions SMALL BUSINESS GUIDE To Overlooked & Uncommon Tax Deductions STARTUP COSTS A portion of costs incurred even before your business launched can be deducted (e.g., expenses associated with creating the business, consulting fees). Up to $5,000 might be deductible in your first year. HOME OFFICE Slightly more than half of small businesses operate from home, yet only about a third of returns filed by sole proprietors in recent years included a claim for a home office deduction. The home must be the principal place of business, and the space you devote to business must be used exclusively for that purpose. A percentage of your Internet and phone bill used for business also can be deducted. AUTO EXPENSES The portion of your vehicle use that goes for business purposes is deductible, including commuting to other business locations if you claim a home office as a deduction. Don’t overlook trips to the bank, post office, etc. — and tolls and parking fees, too. With a newer car, using the actual expense method might benefit you because of depreciation as well. TRAVEL EXPENSES Many of the expenses associated with travel (including airfare, hotels and dining) can be deducted — even when the trip is a mix of business with pleasure. The keys are the length of the trip, and conducting business must be the primary purpose of the trip. MISCELLANEOUS EXPENSES Minor expenses can escape your attention, but if they’re ongoing, they really add up. Examples: bank fees, business association dues, magazine subscriptions, coffee services, cable and Wi-Fi for your customer service area, postage, etc. BONUS DEPRECIATION You may be able to write off the cost of new equipment in full (up to $500,000) in the year you bought it. In addition, a first-year bonus depreciation deduction is available through 2019. ADVERTISING AND PROMOTION Not all of your advertising and marketing activities are ongoing. Expenses for infrequent undertakings such as printing business cards, or sponsoring a youth sports team also are deductible. CARRYOVERS Certain expenses that you could not claim as deductions in previous years — such as capital losses that were subject to annual limits — may be deductible. MISCELLANEOUS One-time expenses, by definition, are uncommon. Some examples: videotapes that supplement your business skills, casualty or theft losses, consulting fees, trade show fees. BAD DEBTS The costs of goods sold but not paid for can be written off. Loans to employees or vendors that are not repaid also may be deductible. Overlooked Tax Deductions Many small businesses miss opportunities to save on taxes. Here are some overlooked and uncommon tax deductions that could help remedy that.