There are several tax strategies that can help small business owners to cut down their expenses. Below are some of the most beneficial and tested strategies that you can follow:
Entertainment expenses are tax deductible
however, you must take care of the important guidelines before adding it to your tax return. Only those entertainment expenses can be added to your tax return where business is discussed during/ before/ after the meal. Also, the surroundings must be within the business conduct and purpose. For instance, a restaurant would be a great location for such an event but a location with distracting activities like like trekking; floorshows or sports events would interrupt the purpose and cannot be included.
As per the amendments made in 1994, the IRS allows as much as 50% deduction on the business entertainment expenses. However, another thing to consider is that the meal must be specifically arranged for the purpose of conducting a business meeting along with proper documentation of all the expenses to attach with your returns.
‘Business Automobile Deductions’
The IRS has added a mileage deduction rate that cuts down your expenses to a significant amount, out of which the rates are 12 cents per medical or moving mile, 14 cents per charitable mile and 36 cents per business mile.
You can include all the cars that you own in the deductions because the business use is determined by the miles travelled for business purposes. In order to determine the business use, the business miles are to be divided by the total miles for each car. So, remember to keep a proper mileage log. In case you find determining the business use and laws difficult, you can always reach out to us for free consultation
‘Home Office Deduction’
Add your home address and number on your business cards and ask your business guests to sign a log when they visit your home office for business purposes. You can also deduct long distance call charges that have been used to discuss business. In addition to this, don’t forget to retain the paid invoices and receipts to determine the deduction percentage.
You can also deduct the expense of business assets that you purchase for up to $10,000. However, before adding those items in the deductions, make sure that those equipments meets all the necessary qualifications of the ‘Home Office Deduction’ law.
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