Small business owners generally loathe tax time. But if you take all of the business deductions allowable, you can usually lower your tax bill significantly. Recording and reporting deductions doesn't have to be drudge work. With a solid grasp of the expenses you can legally deduct and with a little help from tax software or a tax professional, you can:
- Reduce the time spent calculating deductions
- Be certain you're saving the proper receipts
- Be certain you're filing the proper forms
- Minimize the chances of an audit
Check with the IRSGo straight to the ultimate source for information on deductions you can claim on your federal business taxes.
IRS Small Business and Self-Employed One-Stop Resource includes an overview of business expenses you can deduct. IRS Publication 535, updated each year, provides a detailed overview of deductions.
Use the proper formsThe forms on which you report your deductions depend on your company's legal structure: sole proprietorship, partnership, LLC or corporation. For instance, sole proprietors must file Schedule C or Schedule C-EZ of Form 1040; partnerships must file Form 1065; corporations must file Form 1120-A, 1120 or 1120-S; and home-based businesses must file Form 8829.
forms for filing your business deductions at IRS.gov.
Know your home-based tax deductionsBusinesses run from the home are eligible for a variety of deductions, including deductions for a home-office, cars, furniture, equipment, supplies, business travel and more.
Stay within the lawDon't tempt fate by overstating deductions or attempting to claim a deduction for expenses that aren't allowable.
Get tech helpBusiness tax software programs can help guide you through the process of recording and reporting deductions.
Hire a professionalRunning a business 24/7 doesn't leave a lot of downtime for learning about tax deductions. To make sure you're taking advantage of all the deductions you're entitled to and that you're reporting them correctly, get help from a CPA or an accountant.
- Keep accurate records of all purchases and expenditures throughout the year; when it's time to file your tax return, you'll be ready.
- Be careful not to spend limited resources just because it's deductible. You don't want to end up with stuff you don't really need. Keep the cash instead.
- Make sure you file all of your tax forms on time.