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Today, small business tax and compliance issues are more involved than ever before. Tax laws are being revised, and new ones are being added, which can be confusing and frustrating. However, it is essential to understand the basic tax laws and potential business tax deductions. This can help you stay on top of your deductions throughout the year and come in handy if you file your business’s taxes at the last minute.
This Balboa Capital blog post features three valuable business tax deductions that you might be able to take advantage of. Balboa Capital is a small business lender, not a financial advisor or tax advisor, so make sure you consult with an accountant to see if these deductions apply to you.
1. Small business expenses.
Your small business will incur various small business expenses, and many of them are tax-deductible. These include the costs of renting your office or warehouse, business travel, and employee payroll. In addition, you should ask your tax advisor about other standard deductions, including office supplies, computers, software, fax machines, desktop scanners, copiers, industry-related magazines, and telephone bills.
Just be sure to save all of your receipts, as you will need them when it comes time to do your business taxes. All of these business expenses will offset your taxable income.
2. Capital business expenses.
Capital expenses are the dollars it takes to buy assets your small business needs to operate. For example, let us say you own a towing business and need to finance a tow truck. The tow truck’s cost is considered a capital expense and does not fall into the deductible business expense category. Still, you can deduct specific amounts from your tow truck purchase based on its depreciation. Your tax professional can provide the information you need regarding your business’s specific capital expenses.
Does your small business own a car or truck? Do you use your car or truck for business purposes? If you answered “yes” to either of these questions, you might be able to deduct the standard mileage rate for every business mile you drive. Additional tax deductions that can be made include fees for parking and toll-road charges. Keep accurate records of your mileage and related expenses for your accountant.
Balboa Capital hopes you found the information above to be beneficial. We also want to remind you of one of the most popular tax deductions: Section 179. Consult with your accountant to determine if the equipment you purchased or financed qualifies for Section 179. Moreover, if you want to get the estimated tax savings for an equipment purchase, use our convenient Section 179 tax calculator.
Section 179 limits and information on the Balboa Capital website are for illustrative purposes only; the Section 179 limits and information provided are subject to change by the IRS. Please visit the IRS website or consult a qualified tax professional for confirmation of the current Section 179 limits and information related to your situation.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.