Small business tax deductions refer to to the amount that is exempted from taxation. The tax code makes allowances for cost deductions on gross income received from business. The amount of profit made by the business concern is the amount on which tax is levied.
Tax deductions on small business tax payments results in lowered amounts of payable taxes. The opportunities of tax deductions on offer must be grabbed with both hands in order to reap maximum benefits.
The following are the small business tax deductions on offer:
Software and subscriptions
Entertainment, travel, meals and gifts
The home office, according the IRS is the place that used for the purpose of carrying out business. Tax deductions on home offices are available. The total area covered by the home office has to be divided by the number of square foot of area that the total house covers. The amount arrived at is the amount of business expenses that are related to the home office as for example mortgage, rent, electricity, insurance and others.
The business supplies that are bought by the small business concerns are also eligible to receive tax deductions. The receipts are the proofs of these expenditures and hence they must be preserved carefully. The expenses incurred as a result of purchase of office furniture is also deducted from taxable amount. This expense can be deducted all at a time in the year of the purchase of the furniture or it can also be deducted over a time of seven years. Other business equipments like scanners, fax machines and computers are tax deductible.
Small business tax break is also available on softwares and subscriptions according to the recently amended Section 179 of the tax laws. IRS also offers tax deductions on documented records of the mileage incurred on business purposes. The costs incurred on meals, travel, gifts and entertainment that are related to business purposes are also liable to be fully deducted from the amount of tax to be paid. However, half of the expenses incurred on meals is liable to receive tax deductions. Insurance premium amounts are also excluded from the net amount of business tax payable. However, deductions cannot be received if the amount of insurance premium is more than the net profit made by the business.
Last Updated on : 29th July 2013