Many entrepreneurs know that there are lots of things to include on their business tax returns to help them manage the costs of running a business. While there are limits as well as timing constraints, most expenses can be written off and this is definitely something to take advantage of this upcoming 2018/2019 tax season. Many of the same type of deductions that apply to sole proprietorship can also be used for other business entities including C and S Corporations, limited liability companies, and partnerships. Depending on what type of business you have, the rules may apply differently to you, but more than likely you’ll have much to gain by considering these potential tax deductions for your business:
- Wages and Salaries
Most forms of payment to employees are considered tax deductible expenses for businesses. These include bonuses, commissions, and taxable fringe benefits, in addition to the common salaries and wages of employees. Employee payment should not be confused with payments to sole proprietors. Payments to these entities are not considered wages, and are therefore not tax deductible.
- Freelance and Contract Labor
Similar to employee wages, payments to independent contractors and freelancers are deductible business expenses you can claim on your taxes. In order for the deductible to be valid, the contractor or freelancer will have needed to have been paid a minimum of $600 for the year, and it will be required that you issue a 1099 tax form.
- Business Supplies
All great businesses need resources and supplies to run effectively. The good news is that in most cases you are able to include these supplies on your tax form as a deductible. These supplies are deductible business expenses if they are purchased or furnished to customers.
- Car and Truck Expenses
Operations and transportation is a huge element and a source of expenses for many businesses. Most small businesses use some type of vehicle, and the cost of operating the vehicle is deductible, but only in the case that there are records to prove business usage. When deducting costs, it is not required to keep receipts of expenses if you use the IRS standard mileage rate of 54.5 cents per mile for 2018. The standard mileage rate can be used regardless of whether you lease or own the vehicle.
If you didn’t already know, the electricity bill for powering your business facility is fully deductible from your business taxes. This can include mobile phone expenses as well as a second landline from your home office.
Luckily, the rent for your business space is also deductible from your small business taxes. This applies regardless of the size of the facility or whether it is an office, boutique, factory, or other facility.
The Boutty Law Firm works with many small businesses across Central Florida, from corporations, to partnerships, and more. For legal assistance with your commercial business needs, contact our law firm at 407-216-2766.