If you think that increasing sales is the only way to make a business more profitable, think again! Decreasing what you spend is as essential as increasing the amount you sell. From an office chair to an office building, every purchase you make for your business may be tax deductible. By knowing what purchases qualify for tax deductions, business owners can save thousands of dollars annually on expenses- money that could be better spent in expanding their businesses.
The Internal Revenue Code describes deductible business expenses as "ordinary and necessary"--it must be typical for your type of business. For example, a pizzeria that purchases a larger oven to increase its output would be eligible for a tax deduction, while an auto repair shop making the same purchase would not!
Whether you handle your own taxes or hire a professional, keeping proper business records is the key to receiving every deduction to which you are entitled. With receipts and detailed records that prove your business expenses, you may be eligible for some or all of the following deductions:
- Utilities like electricity, gas, and water can be a major expense for a small business. Include them as a tax deduction to avoid paying more than you should.
- Business repairs are often unpredictable and can put an unexpected strain on your business. However, by including them on your taxes, you can at least salvage some of the money.
- Interest and fees on business debt can be frustrating but necessary expenses. Why pay taxes to the government when you are already paying interest to the bank?
- Charitable contributions, auto expenses, depreciation on equipment, marketing, as well as many other business expenses can also be deducted from your taxes.
Don't overlook tax deductions as an important business tool! With the proper knowledge and organization, business tax deductions could be a key factor in taking your business to the next level.
Your Money & You Staff have written a series of finance related articles. For additional information on related topics, visit http://yourmoney.accion.org
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