Lowering your tax liability is a primary aim of business owners. Did you know there are qualified expenses you can deduct from your taxes? This guide shows you some of the most common business tax deductions.

Which Expenses Can I Deduct?

You can claim deductions on the following items:

Utilities

You can claim your utility bills as business tax deductions. Things such as electricity, water, natural gas, trash, and more can qualify. The caveat here is can. If you set up an office out of your home, things become a bit more complicated. You have to demonstrate to the IRS that the space is solely for business purposes. To demonstrate, the first landline phone line isn’t tax-deductible since others in the home can use it for personal reasons. However, if you add another line, then you can deduct it. 

Insurance

Your business might need insurance needs, such as continuation, health, life, auto, and other policies. All of these policies bought for your business only can qualify for tax deductions. Moreover, if you hire employees and pay for their health insurance, you might receive a tax credit of up to 50% under QSEHRA. 

Business Expenses

When you set up your company, you’ll need office furniture, supplies, computers, software, consulting services, attorney, property rent, advertising, and more. If you rent a space for your company, you can earn business tax deductions on the mortgage interest, repairs, depreciation costs, and more. Check with the IRS to ensure your building qualifies before claiming these deductions.

Auto

Any vehicle expense related to business can qualify for a tax deduction. The IRS also allows you to earn credit for every mile (currently $0.58) you drive for business purposes. Keep in mind if you split the vehicle between business and personal use, you need to provide accurate accounting for when you use it for your company. 

Employee Expenses

When you hire employees, you can deduct the money paid for their salaries and bonuses if they are not sole proprietors or partners–indicating they’re not employees. If you offer programs like education assistance or retirement accounts, any money paid to these also earns you business tax deductions. 

Travel

Should the nature of your business require you to travel out of your city regularly for more than one working day at a time, you can claim eligible travel expenses. These include hotel, flight, and rental car. 

How Do I Claim Business Tax Deductions?

As you file your tax return, you need to complete Schedule C. In it, there are sections for income and expenses. Using this form allows you to calculate your taxable profit. 

Maximizing Your Tax Deductions

Running your business takes enough of your time. If you do not have much to devote to taxes, let our experts assist you. Every year, we undergo rigorous training to ensure we’re up to date on all the changes in tax law. In turn, we can help you find all the deductions to lower your tax liability while keeping you compliant. Learn more about our services today.