April 01, 2015

Ten Ways to Maximize Your Business Tax Deductions

Emily DeKruif

Taxes can whittle away a significant portion of your business’s capital. Are you taking advantage of all possible opportunities to lower your taxes through deductions? Keep these 10 valuable deduction tips in mind as you total your business expenses for the previous tax year—and as you plan for the future.

1. Take Advantage of Start-Up Costs and Additional Expenses

The costs of starting a business are often deductible over the first several years of the business’s life. Other business expenses such as office supplies, postage, and utilities may also be deductible.

2. Record Legal and Professional Fees

When running a business, you should always seek advice from experts on tax implications and best practices. Fees paid to attorneys, tax professionals, or consultants are generally deductible in the year they are incurred. Business owners can also often deduct the cost of books related to doing business or practicing law.

3. Deduct Advertising Expenses

The cost of promotional materials such as business cards, digital or print advertisements, and even tradeshows may be deductible as current business expenses.

4. Include Membership and Educational Expenses

If you pay dues for a business-related association or pay to attend business-related seminars, such as CLEs, these may be deducted.

5. Track New Equipment or Software Purchases

Some small businesses can write off costs of specific assets in the year they are purchased. Software is typically depreciated over a period of time.

6. Make Interest Work for You

If you use credit to finance business purchases, the interest is deductible. Be sure to keep records that prove the business used these items.

7. Use Your Car for Business And Save

If you use your car for business or your business owns a vehicle, you can deduct some costs associated with it. There is a standard mileage rate you can deduct, along with tolls, parking fees, and sometimes even depreciation.

8. Keep Receipts for Entertainment Expenses

Careful recordkeeping of coffees, lunches, and other business meetings can allow you to deduct these expenses.

9. Give and Receive With Charitable Contributions

Unless your business is a corporation, most charitable contributions to qualified organizations are deductible. Be sure to maintain receipts, cancelled checks, or written verification for your records.

10. Retain All Tax Documents for at Least Seven Years

Good recordkeeping will not only save you time, but may also save you money. Keep copies of tax returns, all receipts, mileage logs, licenses, and papers related to incorporation to help authenticate your deductions.

Important Bonus Tip: Seek the Advice of a Professional

Taxes can be complicated and confusing. To prevent mistakes or oversights, reach out to a tax professional when setting up your practice—and on an annual basis as your firm grows. You can also visit the IRS website to learn more about deducting business expenses.

About ARAG

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Emily DeKruif

Emily DeKruif has been a member of the ARAG Provider Relations team since June 2010. Emily builds partnerships with state and national bar associations and develops relationships with attorneys to share the benefits of participating in legal plan networks as a supplemental referral and revenue source.