As a business owner, you’re always looking for ways to save money. And while no one gets excited about taxes, finding ways to save on taxes can make a big difference to your bottom line.
The good news is that the IRS offers a number of tax deductions that can help you do just that. By taking the time to learn about the different deductions that are available, you can keep more of your hard-earned money and use it to grow your business.
Business Tax Reduction Strategies
There are a number of strategies you can use to reduce your tax liability, and it’s important to work with a qualified tax professional to ensure you’re taking advantage of all the opportunities available to you.
But even if you’re not a tax expert, there are some basic steps you can take to save on taxes. Here are five common deductions that you may qualify for:
5 Key Tax Deductions For Business Owners
- Employee Benefits
Business owners often provide employee benefits to attract and retain quality workers. These benefits can include health insurance, retirement plans, and paid time off. While these benefits can be costly, there is a silver lining: they are tax deductible.
In order to claim the deduction, the business owner must have a written plan in place that details the employee benefits that will be provided. Additionally, the owner must ensure that the employees are actually receiving the benefits that are outlined in the plan.
This tax deduction is available for businesses of all sizes and can be a significant tax savings.
- Self-Employed Health Insurance
As a business owner, you may be eligible to deduct your health insurance premiums on your taxes. This deduction can be taken for both yourself and your family, as long as you’re not eligible to participate in a health plan through your spouse’s employer.
In order to qualify, your health insurance must have been established under your business, and you must not be eligible for any other health coverage. If you meet these criteria, you can deduct the cost of your premiums on your tax return. This deduction can help reduce your taxable income, and ultimately save you money on your taxes.
- Home Office
The home office deduction is a tax deduction that business owners can claim for the expenses related to maintaining a home office. To qualify for this deduction, the home office must be used exclusively for business purposes. This means that the office cannot double as a guest room or home gym. In addition, the home office must be designated as the primary place of business. This means that business owners who maintain an office at a separate location cannot claim the home office deduction.
The home office deduction can be taken by deducting a percentage of eligible expenses such as rent, mortgage interest, utilities, and maintenance costs from business income. Business owners can deduct a portion of these expenses based on the percentage of their home that is used for business purposes. The home office deduction can save business owners hundreds or even thousands of dollars each year in taxes.
- Vehicle Expenses
The vehicle expense deduction is a deduction that business owners can take for the business-related expenses incurred from using their personal vehicle. These expenses can include gas, maintenance, and vehicle depreciation. In order to qualify for the vehicle expense deduction, business owners must keep accurate records of their vehicle expenses. They must also use their vehicle primarily for business purposes.
- Phone and Internet Services
The phone and internet services deduction allows business owners to deduct a portion of the cost of their phone and internet services. To qualify for this deduction, businesses must use the phone and internet services for business purposes.
The deduction is available for both landline and mobile phone services, as well as for internet service. This deduction can be taken for the cost of phone and internet services that are incurred by the business including charges for long distance calls, data plans, and other fees. It’s also available for the cost of phone and internet services that are used by employees of the business.
Work With A Professional Tax Consultant
When it comes to saving money on your taxes, there’s no substitute for professional advice. What we’ve listed here is only a handful of the deductions that are available to business owners. Working with an experienced tax consultant is the best way to ensure you’re taking advantage of every deduction and credit that you’re eligible for.
If you’re looking for a tax consultant in the Hampton Roads region, we hope you will consider us here at Minton CPA & Associates. Christina Minton acts as our lead tax consultant and has been providing tax and accounting services to Hampton Roads business owners for over 30 years. By working with Minton, you can rest assured that you’re getting the best possible outcome for your tax return. Contact us today at 757-546-2870.