NEW: Ask The Expert with Wegner CPAs

Question: What are the deductions that small business owners often overlook?

Answer: There are a few deductions that you can claim on your taxes as a small business owner that may look like small numbers when seen separately, but might impact your taxes in a big way. A few of these deductions are outlined for you here:

  • Mileage deduction – Often times business owners don’t keep track of business miles driven on a personal vehicle. The IRS offers a mileage deduction that is equal to 53.50 cents per business mile driven in 2017. There are a lot of applications that can be used on smart phones to keep track of these miles.
  • Educational expenses – The amount spent on taking educational courses or for purchase of books and materials related to business are fully deductible on a business tax return.
  • Internet and telephone – A reasonable portion of internet and telephone expenses can be deducted as a business expense based on the percentage of use that’s for business.
  • Safe harbor election – Businesses can now expense small office equipment and furniture costing less than or equal to $2,500 instead of capitalizing and taking depreciation over the years. This applies to anything that is depreciable and the invoice for that particular item doesn’t exceed $2,500.
  • Cash Purchases – Small business owners often lose deductions for purchases made by personal cash. Office supplies or other items used in the business are deductible. They may seem insignificant but many small purchases on an annual basis can add up.
  • Home office deduction – If you conduct your business from home, then you may be eligible to take a home office deduction. This may include expenses like repairs, utilities, depreciation, insurance, etc. and other expenses that are normally not deductible. The area must be used exclusively for business.
  • SEP Contribution – If you are self-employed with no employees and investing in a retirement plan, then the amount of contribution can be taken as a deduction either on the business or personal tax return.

Please seek advice from a tax professional if you need clarification on any of these deductions.

By Swati Jain, CPA, Senior Accountant, Wegner CPAs
swati.jain@wegnercpas.com
P: 608-274-4020

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