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.
ARAG (www.araggroup.com/Attorneys) is a leading legal plan administrator. ARAG believes every American should have affordable access to legal help and provides attorneys access to gain free referrals, increased visibility for their firm, and an opportunity to build more meaningful client relationships.
ARAG’s North American headquarters are in Des Moines, Iowa. ARAG has earned the prestigious Center of Excellence Award for eight consecutive years (2007–2014) and has been named a Top 100 Call Center by BenchMark Portal for four consecutive years (2011–2014), continuing its track record of industry-leading customer service. ARAG team members voted ARAG a Best Places to Work in Insurance (2009–2013).
To learn more about ARAG visit ARAGgroup.com/Attorneys or call 866-272-4529, ext. 3.