Regardless of your income level or employment status, one thing all American consumers can count on is taxes. However, if you own a business, have a home-based microbusiness, or are self-employed, there are numerous tax deductions and you can access that many traditionally-employed individuals cannot, thereby yielding greater tax savings.

Basic Business Tax Deductions

There are some basic tax deductions that all business owners and self-employed individuals should incorporate into their tax plan. Although it is important to reduce your tax rate for the current year, keep in mind that your total tax payment for the previous year is used to set your estimated tax payment for the following year.

If you are not already maintaining documentation of each of these basic business deductions as noted by Nolo.com, start right away. They will definitely help you minimize your tax rate, and also quarterly estimated tax payments in the following year:

• Office Expenses and Supplies: The rent and utilities associated with your business are deductible, including home-based businesses. With outside office or workspace, you can deduct all the costs involved. With home business space, you will need to calculate the square footage used for the business.

If you run your business from your home, ensure that you have a clearly separated area for business-related activities that is not shared for other uses. It doesn’t even need to be a separate room. After calculating the square footage, find out the proportion of your total home’s square footage used for the business. This proportion can be used as a multiplier for the percentage of rent or a mortgage payment, and utilities used for home business operations.

Finally, as long as you use them up within the tax year you purchased them, all costs related to office supplies (paper, paperclips, staples, you name it) are tax deductible.

• Car: Whether you keep records of the total costs associated with upkeep of your vehicle (including gas, repairs, maintenance, and even car washes), or use the standard mileage-by-rate method of calculating total miles driven for business activities, you can deduct your car expenses from your business taxes.

• Travel: All expenses associated with business travel, like airfare, transportation, lodging, and food (see below for limitations) are tax deductible.

• Meals/Entertainment: Whether during a trip or back home, meals and entertainment related to business, client meeting, etc. can be tax deductible. You must discuss business-related activities during the meal or entertainment event. However, only 50% of total annual expenses for meals and entertainment can be deducted. There may also be limitations if you dine alone, even as a business owner/operator. Overall, considering how often you and your clients may meet or need to eat, the deductions can still pay off.

You should always consult a tax professionals for more details about the tax deductions and tax savings strategies your small business can use. After all, professional services are also tax deductible; see “Equipment, Expenses, and Professionals for Hire: More Small Business Tax Savings” for more tax-reducing deductions.


References
Stephen fishman. Top Ten Deductons for Your Business

www.nfib.com. Tax-Saving Moves That Will Pay Off Next filling Season

E. Ralph Stewart. Top 25 Deductions for Businesses