The more tax deductions your business can legitimately take, the lower its taxable profit will be, but many small businesses miss out on some of the best tax deductions available to them. The key is learning about IRS rules that govern what you can and cannot deduct. Here are fourteen of the best and easiest tax deductions that your business can take.
If you're a professional and own your own business, no one needs to tell you that taxes are one of your largest expenses. The IRS doesn't make a point of advertising ways to lower your taxes and it certainly won't complain if you don't take all the tax deductions you're entitled to. In fact, many professionals miss out on all kinds of deductions every year simply because they aren't aware of them -- or because they neglect to keep the records necessary to back them up.
How tax savvy a businessperson you are has a great effect on how much money remains in your pocket at the end of the year. Knowing how to maximize your deductible "ordinary and necessary" business expenses lowers your taxable income, which means you pay less to the IRS at the end of the year. But watch out: the IRS scrutinizes these deductions to make sure you don't include any purely personal (nondeductible) expenses.
When you use part of your home for business, you may be able to deduct a percentage of many of the costs of running your home, such as utilities, rent, insurance, depreciation, mortgage interest, real estate taxes, and some casualty losses, repairs, and improvements (if they relate to the part of the house you use for business). The home office deduction is available to renters and homeowners alike.