4 Ways to Save Big with Business Deductions
Tax season is here and it is time to review all expenditures. As a business owner, there are ways to keep more cash to reinvest in your business or to take some time off. Having a good tax preparer helps to do this but education on deductions is an investment that pays off. Let’s review 4 ways to capitalize on business deductions.
1. Operating expenses are your largest deduction.
Rent, utilities, supplies and equipment for daily activities are one of the largest deductions to write off. The IRS allows owners to capitalize on the cost of improvements, even if some of them may seem like ordinary repairs.
2. Companies can deduct for costs associated with employees.
Salaries, retirement and savings plans can be used towards deductions. Savings plans benefit employees and offer tax advantages. According to the IRS for 2014 on, small business owners are eligible for a health care tax credit for up to 50% of premiums paid for employees. You may also transfer one year’s credit to other years.
3. Some items purchased can be counted as deductions.
Items for both personal and business use, have the potential to be a business deduction. If you borrowed money, and part of the loan is used for business and part for a vacation, some of the interest for the portion used towards business can be applied towards a deduction. If you work from home or use part of your home for business purposes, a percent of your expenses can be deducted. Expenses may encompass mortgage interest or rent, insurance, utilities, repairs and depreciation, especially on computers and vehicles. For cars used for both business and personal needs, capitalize for depreciation and record business mileage.
4. Tax savings for operating at a loss.
Sometimes operating at a loss has a silver lining. When deductions account exceeds income for the year, you have a “net operating loss.” In this situation, use this operating loss to lower taxes paid in other years.
Laws constantly change. It is important to stay abreast of those changes to keep the maximum of money working for your business. Speak to the knowledgeable staff at The Income Tax Center in Missouri to find out more. Conveniently located in Sunset Hills, St. Louis Hills Mall, South County Mall and St. Clair Square, they do the work so you don’t need to.