It’s easy to feel overwhelmed when it comes to saving money on business taxes. If you own a small business after the disastrous year that was 2020, it is important now more than ever to save as much as possible on taxes.
And yes, that means tracking your deductions way before tax season is here. To help you out more, we’re running you through some tips that can help.
1. Write-Off Rental Space
Similar to writing off a portion of rent for home offices, you can deduct rental expenses from business taxes for other setups, too. Since you’re probably renting out some sort of business property when not operating from home, you can write off your rent on your tax return. Neat, right?
2. Write-Off Office Supplies
Whatever supplies your purchase to maintain your home (or otherwise) office are deductible. This includes stationery, software, printer ink cartridges, cleaning materials, and even kitchenware. Even though you might think you’re not getting substantial payback from this, remember that every penny counts.
3. Remember Personal Tax Deductions
To further reduce costs as a business owner, you can claim tax returns on personal expenses again. For instance, if you pay someone for childcare while on the clock, you can file for returns.
The Child & Dependent Care Credit has a $3000 to $6000 limit depending on the number of children, a 20-35% deduction policy, and is applicable for children on 13 or incapable of self-care. But, this all depends on whether you’d want to file them on individual or business taxes.
4. Write-Off Repairs and Maintenance
There’s no way to run a business without making the occasional repairs. Since such an expense typically comes with a high cost, writing it off can promise some serious cash. However, keep in mind that modifications for capital improvement such as a new roof or expanding the business cannot be written off.
5. Deduct Legal and Professional Fees
Due to legal changes and pandemic disruptions, it is likely that your business incurred more professional or legal fees this year. If that is the case, be sure to deduct these expenses.
Under the right circumstances, your tax preparers, accountants, bookkeepers, and lawyer’s fees can be written off. However, something unique or unreasonably expensive doesn’t qualify.
2020 was one tough year, especially for small businesses, which suffered from closed shutters and struggled to navigate the new normal. Now’s your time to reclaim as much as possible, and writing your tax returns is the way to go. Sure it is long and tedious work, but it’ll all be worth it in the end.