Tax season may traditionally run from January to April 15, but preparing for tax season is a year-round job for business owners. When we discuss tax liability with clients, write-offs are one thing clients get excited to discuss (because everyone likes to save money!). Below, we explore a few of the lesser-known tax write-offs (or deductions) that correlate to things you may already be doing, but not taking full financial advantage of (such as purchasing software, hiring veterans, or even attending educational programs). Below, view our list to see if you could be missing out on valuable tax deductions this fiscal year.
Looking for more help when it comes to small business tax write-offs? Read this post to see some of the common mistakes businesses may make when reporting tax deductions. And of course, reach out to Pine & Co. for help with accounting, tax, and other business services.
Note: When we mention “tax deductions”, it’s not a direct reduction of the actual tax dollars owed. That’s actually called a tax credit (which you can learn more about here). A tax deduction reduces your taxable income, which in turn reduces your business’ resulting tax liability.
The Tax Deductions and Credits You May Not Know About
Remember, some of the deductions in this list may not be available to your small business. Consult with your tax advisor or CPA before claiming a deduction on your tax return.
Work Opportunity Tax Credit
If you employ veterans or other long-term unemployed people, you could be eligible for the Work Opportunity Tax Credit. It allows you to deduct up to 40 percent of your first $6,000 in wage costs.
You likely use a software program to manage projects or control bookkeeping. The good news is that going digital doesn’t just save on paper costs, it also may qualify as a deduction. Previously, computer software was available as a tax depreciation, but now the IRS allows for full deduction of software (including the POS system if your business utilizes one).
Does your business own real estate property such as its office building or lot? You can fully deduct any mortgage interest paid throughout the year. Unlike interest on your personal property, the IRS sets no cap on the size of loans from which interest can be claimed.
Legal and Professional Accounting Fees
Fees incurred from legal counsel or professional accounting services can be deducted. It’s all the more reason to seek services from professional accountants like those at Pine and Co.
Carryovers From Previous Years
Certain small business tax deductions can carry over year to year (capital loss being a prime example). Remember that specifics around this type of deduction are frequently changing, so it’s a good idea to check with your Pine and Co. accountant on current regulations before filing.
Those pesky fees that your bank charges? Deduct away. Any monthly account fees or even ATM convenience charges can all be deducted when filing taxes. It’s a good reason to keep track of each and every receipt from the bank.
If your business sells goods (rather than services), you can deduct the cost of goods that have been sold yet not paid for by customers. (Remember this deduction when planning those year-end sales.)
Professional education for you and your employees could be any workshops, trainings, or educational conferences that improved your skills as it relates to your job. Typically, most costs to attend educational events can be deducted, especially if you work in an industry such as real estate that requires license renewals.
Tax deductions are just another great reason for your business to give to a good cause. Deductible expenses can include gifts of supplies, money, or property. Some restrictions can apply, so check with your Pine and Co. accountant before you make a charitable deduction, to ensure the organization you want to support qualifies for a deduction.
Make the Most of Small Business Tax Write-offs
Remember that tax deductions are an important way your business can reduce its tax liability each year. Though maintaining records of receipts and keeping track of each expense may be difficult, it’s a cost-saving habit worth adopting.
If you’re interested in learning more about how to increase the number of small business tax write-offs, reach out to Pine and Co. today. Our team of professional accountants and financial partners can help you save more — not just in annual taxes, but in business practices throughout the year.