Running a small business is both exciting and overwhelming. The financial aspects are key, though, for your long-term success. Considering that you may not have access to an entire team of accountants and tax professionals, filing your own taxes can be intimidating. As a small business, you may be entitled to certain tax deductions that can help manage your cash flow. Here are the top tax deductions that every small business owner should know.
Advertising and Marketing
In today’s technology-laden world, advertising and marketing deductions for small business are more comprehensive than in previous decades. The most commonly overlooked advertising and marketing expenses when it comes to tax time are:
- Logo and business card design services
- Website design and hosting costs
- Thank you cards for customers
- Print and online advertising, such as ads and boosted posts
- Event sponsorships
Depreciation
Depreciation is an accounting technique that considers the declining value of certain durable assets, such as computers, furniture, and equipment. Depreciation as a tax deduction works by taking the cost of these items and spreading it out over the useful lifetime. You can take a portion of the value each year as a tax deduction for your small business.
Home Office Expenses
As more people decide to evolve their hobbies into small businesses, home office expenses should be tracked for tax purposes. The IRS has very clear and strict guidelines about what qualifies as a small business and how to calculate any deductions. If you have a space in your home that is used solely for your small business, you may be able to deduct utilities, rent, and other costs, just as you would for a brick-and-mortar business.
Personal Tax Deductions
Depending on the size of your small business and other factors, there may be some other deductions that can be included for your small business. These most often apply to sole proprietors, but other types of small businesses may also qualify. Specifically, you may be able to deduct the cost of childcare if you work from home and can’t run your business and watch your children. You may also be able to deduct any contributions to your retirement plan, as well as healthcare expenses, including premiums for insurance.