Are You Taking Advantage of These Print Related Business Tax Deductions?

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Are You Taking Advantage of These Print Related Business Tax Deductions?
By Linda Chase, linda@ablehire.org.

As a small business owner, you know that every cent counts. So when it comes time to file taxes, you want to be sure you’re claiming every deduction available. Unfortunately, many small business owners focus on big-ticket categories like capital expenditures and cost of goods sold and forget about all the little expenses. But while a few dollars here and there might seem minor, these costs add up to a hefty sum. If you want to save money on small business taxes, make sure you’re not missing these valuable deductions:

Organizational Costs
Before you start earning revenue, you need to get your business up and running. Luckily, most costs associated with forming an LLC, partnership, or corporation are fully deductible. This includes Articles of Organization fees, legal expenses, and accounting fees. The IRS allows businesses to deduct up to $5,000 in organizational and start-up costs during your first year in business.

Marketing and Advertising
Marketing is another critical piece of building a business. From designing a website to launching an ad campaign, marketing and advertising costs add up quickly. This is especially true in the start-up phase when cash flow is low, making this tax deduction an especially valuable one.

Deductible marketing costs include both traditional advertising via print, radio, and TV, as well as digital marketing on websites, social media, search engines, and email. While some small businesses opt to DIY their marketing, you’ll be glad to know the cost of hiring a marketing agency is deductible, too.

Office Supplies, Office Expenses, and Home Offices
Do you know the difference between office supplies and office expenses when claiming tax deductions? These categories might seem like one and the same, but there are important distinctions.

Office expenses refer to the ongoing costs of operating an office — things like utilities, software, computers, and phone systems. If you buy a new cellphone for business use, for instance, you can write that off. Assets under $2,500 that are deducted — rather than depreciated — are also counted as office expenses. Home business owners can deduct certain expenses like mortgage interest and utilities in proportion to the amount dedicated to business use.

On the other hand, office supplies are short-term, consumable purchases like pens, paper, coffee, janitorial supplies, and printer ink and toner. Office supplies are separate from the cost of goods sold because they aren’t directly used to make or ship a product.

Vehicle Expenses
Whether you drive a company car or use your personal vehicle for business, you can deduct up to 56 cents per mile in 2021. Tracking mileage doesn’t have to be a pain either: With apps that automatically log miles, you can set it up and forget it. Just keep in mind that commuting miles aren’t deductible.

Some business owners choose the actual expenses method instead of the standard deduction for vehicle expenses. This lets you deduct additional expenses like fuel, maintenance, lease payments, and garage rent. The actual expenses method is beneficial for vehicles with high operating costs, but some vehicles fare better under the standard deduction.

Professional Development
Staying on the cutting edge is critical to your business’s success, so it makes sense that the IRS treats work-related education as tax-deductible. This includes classes, seminars, and workshops; industry-specific books and subscriptions; and transportation to and from educational events.

Business owners can deduct expenses associated with upskilling or maintaining skills within their field, but not all education expenses are tax-deductible. If you’re taking a class or pursuing a degree in order to start your business, you’re not eligible for this deduction. Education that doesn’t directly relate to your current business also doesn’t qualify.

Missing out on tax deductions could cost your business big time. Make sure you’re putting as much cash as possible back in your pocket by working with a tax pro to file your small business’s taxes. What you spend on an accountant, you’ll save in taxes, time, and peace of mind.

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February 3, 2021 at 12:51 PM