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Top Tax Deductions For Your Small Business
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5. Bad Debts
If someone stiffs your business, the bad debt may or may not be deductible -- it depends on the kind of product your business sells.
- Goods. If your business sells goods, you can deduct the cost of goods that you sell but aren't paid for.
- Services. If, however, your business provides services, no deduction is allowed for time you devoted to a client or customer who doesn't pay.
6. Business Entertaining
If you pick up the tab for entertaining present or prospective customers, you may deduct 50% of the cost if it is either:
- directly related to the business and business is discussed at the event -- for example, a catered meeting at your office; or
- associated with the business, and the entertainment takes place immediately before or after a business discussion.
 Make notes. On the receipt or bill, always make a note of the specific business purpose -- for example, "Lunch with Joyce Slater of Ace Manufacturing Co. to discuss widget contract."
7. Travel
When you travel for business, you can deduct many expenses, including the cost of plane fare, costs of operating your car, taxis, lodging, meals, shipping business materials, cleaning clothes, telephone calls, faxes, and tips.
What about combining business and pleasure? It's okay, as long as business is the primary purpose of the trip. However, if you take your family along, you can deduct only your own expenses.
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