Small businesses have a hard enough time staying afloat financially without worrying about potential tax liabilities. The deductions or write-offs a business claims serve to lower any taxes on company profits, keeping your tax liability to a minimum. Maximize write-offs and deductions to keep extra dollars in your wallet when tax time rolls around.
Use a home office as defined by the Internal Revenue Service (IRS), and save money by writing off a portion of your rent or mortgage as a tax deduction. Under the same guidelines, Uncle Sam also allows small businesses to write off a portion of home insurance, mortgage interest, depreciation and any applicable repairs. According to the IRS, the deduction applies provided you "regularly use part of your home exclusively for conducting business." The office must be the primary location of your business and used only for business purposes.
Books and Software
Business software often comes with a hefty price tag, but for small business owners the cost counts as a tax write-off. Under previous guidelines, business owners could only deduct software over the course of three years. Updated IRS provisions allow for the full cost of software to be deducted in entirety during the year of purchase. This includes software for bookkeeping, word processing, marketing, email and specialty software if applicable. Books of reference, industry-related magazine subscriptions and corporate directories fall under the same tax-deductible guidelines.
Pens, printer paper, sticky notes and a new laptop all qualify as legitimate deductions within certain parameters stipulated by the IRS. The items must be used solely for operating and running your business. To stay organized, save receipts and invoices throughout the year for any office supplies purchased for business purposes. Throughout the course of 12 months, small purchases of normal company supplies can add up to big savings at tax time.
Costs associated with promoting and marketing your company are deductible within the same calendar year. This includes the cost of business cards, directory listings, print advertisements and electronic advertisements. In addition, the IRS allows marketing expenses that generate positive publicity or goodwill towards the company, provided the connection between the expense and business remains clear. For example, should your company choose to sponsor a little league team or local charity event in exchange for free advertising, the IRS considers the cost of sponsorship tax deductible.