When it comes to running a business, you need to know the most common deductions you can make. Knowing the most common deductions will allow you to keep track of the right expenses and save on your taxes come tax time.
Small businesses are able to deduct a specific amount as start-up costs. The amount that you are able to deduct can vary from one year to the next. Start-up costs are money that you had to spend to get your business started, such as the money used in purchasing a franchise, investing in a business license, or securing the equipment that your business needs to function.
Employees' health insurance premiums are deductible for you as a business owner. You can deduct a certain percentage of each employee plan up to a certain cap. If you enroll in more expensive plans, though, there is an excise tax for what are called "Cadillac plans."
Keep track of all items and services that your business donated to charities. This includes things such as your time if you offer a service where you bill for time. Make sure you have the proper documentation when it comes to charitable donations; that way, you can make sure that you are able to use the donation as a deduction come tax time.
Keep track of all the meals that you pay for and document who is at the meal and what the purpose of the meal is for. Any meals that are for business purposes can be deducted. The key to documenting is to make sure that you clearly identify the business that was discussed at the meal.
Keep track of travel-related to business. Remember that travel is not just about going out of the state. Record all the miles you drive your vehicle around for business purposes so that you can claim a mileage deduction. When you travel for business, keep a log that shows what your business expenses were and what your personal expenses were during the trip.
Finally, if you entertain clients for work, keep careful track of this information. You need to write down the purpose of the entertainment and how it helped your business. In addition, you need to keep all of your receipts. Remember, only half of your entertainment expenses can qualify as business expenses.
When it comes to your business, you should keep track of the reason and purpose behind all your purchases. Many purchases can be written off, so you'll want to keep good track of all your expenses.
For more information, contact a company like Accounting Firm USA.