small business

Can I Deduct This? A Guide to Small Business Tax Breaks

small business tax breaks

If the ceaseless H&R Block commercials and internet ads for refund anticipation loans are any indication, tax season is in full swing. While some people are booking vacations and paying off credit card debt with their refunds, most entrepreneurs are just looking for a few small business tax breaks to ensure every possible dollar is going back into their company, and not to Uncle Sam.

Unless you’re a professional, the tax code is somewhere between perplexing and indecipherable. That’s a problem considering that claiming something you shouldn’t — or not claiming something you should — can result in a dreaded audit by cloaked IRS agents carrying oversized calculators and (probably) thumbscrews.

You can’t take taxes lightly, but that also doesn’t mean you should avoid deductions altogether out of fear of the IRS boogeyman. You just need a better understanding of what’s allowed and what is not.

We’re here to help. These small business tax breaks can help you save a pretty penny on April 17.

Business Dinners

If you’re regularly wooing potential clients, investors, or other businesspeople, you can deduct half of your food and beverage costs. Just keep track of who you dined with and their relationship to your business (Joe Smith from Company X will suffice), the amount you spent and the location and date of the meal.

Pro tip: Always save the receipts and write the reason for the meal and who attended on the back.

Vehicle Expenses

Whether you maintain a fleet of company vehicles or do business using your beat-up Chevy Nova, you can deduct some or even all your vehicle expenses.

If the vehicle is used only for business, you can deduct the whole cost of operation. If not, you still can deduct a portion of the costs based on the percentage of time it’s used for business.

Don’t forget about your mileage. Taking the standard mileage deduction is easiest (53.5 cents per business mile driven), but you might have better results if you calculate your actual costs.

Home Office and Utilities

This is one of a few small business tax breaks that rarely apply to bigger companies. If you work from home, you’re more than welcome to deduct the cost of your home office and utilities such as phone and internet, but the IRS has some strict rules on what does and doesn’t qualify.

Your office must be used for business purposes only. You can’t claim the deduction if you work from your couch while CNN drones on in the background, or if you clear your work-related stuff off the table to put the dinner plates down.

The same applies to phone and internet. If you have a separate phone and internet line that’s used exclusively for business, you can deduct it all. If not, you can only deduct the percentage that’s used for business.

Child and Dependent Care

Since most of us wouldn’t get a ton of work done with a toddler running amok in the office, you can take a deduction for dropping the little bundle of joy off at daycare. The same goes for a physically or mentally handicapped dependent, regardless of age.

The only catch is that you must be dealing with business for the deduction to apply. Uncle Sam recognizes the need to work distraction free, but he won’t pick up the tab for dropping the kids at the sitter on date night.

Medical Expenses

Most small business owners pay for their own health plan, so the premiums are fully deductible, as are the premiums you pay for any of your dependents covered under your insurance. If you’re eligible for coverage through your spouse’s employer, however, you’re out of luck — that disqualifies you from taking the deduction.

Continuing Education

Are you ready to learn? You can deduct all your educational expenses provided they’re somehow tied to your small business. If you’re a veterinarian who wants to take a class in equine gastroenterology, you’re covered. If you’re an accountant who suddenly takes up an interest in juggling, you’re on your own.

The cool thing about this deduction is that it doesn’t only apply to traditional classes. Seminars, workshops, conferences, trade shows, books and even subscriptions to trade-related magazines are also free game.

Advertising and Marketing

Yes, you can deduct the expenses incurred to bring in new customers! This includes marketing materials like billboards, internet ads, business cards and even cool small business marketing agencies like Mischa Communications!

Are You Taking Every Deduction You Can?

The list of small business tax breaks goes on and on; we just wanted to highlight a few of the most common and lucrative examples here. If you haven’t done so already, talk to your accountant and make sure you’re getting every deduction available.

At Mischa Communications, we want to make sure you have all the news, tips and resources you need to be the best small business you can be. Have questions? Give us a call! (Remember: We’re tax deductible!)