Did you know that small business owners must pay property, sales, payroll, and self-employment taxes? 

Running a small business can be very rewarding. But it also comes with lots of challenges. One of the most significant challenges small business owners face is navigating the complex world of taxes.

Understanding which small business tax write-off you’re entitled to can be daunting. This is why ensuring you’re paying what you must is essential. To make things easier for you, we have put together a guide. So keep reading if you want to find out more. 

What Are Tax Write Off for Small Businesses?

Tax write-offs for small businesses are expenses you can claim as a deduction on your small business tax filing. By claiming these deductions, you will lower your taxable income. This will reduce your tax liability. To claim a tax write-off, you must demonstrate that the expense directly relates to your business operations.

How Tax Filing for Small Businesses Works

Small business tax deductions differ from small business tax credits. Most importantly, tax credits are applied directly to the taxes you owe. Therefore, tax credits reduce the actual amount of taxes owed, while tax deductions reduce the taxable income.

Tax credits are typically more valuable than deductions. This is because they directly reduce the tax owed, while deductions only reduce the taxable income. On the other hand, tax credits may have more stringent eligibility requirements compared to deductions.

What to Find Out About Write-Offs 

If you’re filing small business taxes for the first time, several resources can help you navigate the process. One great place to start is the IRS website. This website has a wealth of information on tax deductions and credits for small businesses. In addition, it provides detailed information on different types of tax write-offs. 

The IRS website contains articles that explore topics such as depreciation and expenses related to business vehicles. Another resource is the Small Business Administration (SBA). Consider reading through the content on this website if you are looking for small business tax tools.

It is also a good idea to consult with a tax professional who specializes in small business taxes. They can help you navigate the complexities of tax write-offs. In addition, they will ensure you’re taking advantage of all the deductions you’re entitled to.

The Top Small Business Tax Credits

It can be confusing when you are trying to find the best small business tax deductions for your needs. Here are the most common tax credits that small business owners claim.

 

Advertising and Marketing 

To claim these write-offs, you must demonstrate that your expenses were directly related to promoting your business. Examples of eligible expenses may include the cost of creating and distributing marketing materials, running online or print ads, and hosting promotional events. Claiming these types of credits can be helpful if you run a home-based business. 

Travel 

You can write off these expenses if you frequently travel for business purposes. The most common business-related travel expenses include attending conferences, visiting clients or vendors, and conducting research.

Typical qualifying expenses can include airfare, lodging, meals, and ground transportation. Keep in mind that personal vacations or travel for non-business purposes are generally not covered.

To document travel expenses for tax credit purposes, make sure to keep detailed records of all travel-related expenses. Hold onto all of your receipts, invoices, and travel itineraries.

Some businesses may also choose to use expense-tracking software or apps. These tools help them streamline the process of documenting travel expenses.

 

Commercial Insurance 

Commercial insurance expenses include general liability, property, and workers’ compensation insurance. By deducting these premiums as business expenses, you can reduce your taxable income. Understand that not all insurance premiums are eligible for tax write-offs. Keep in mind that there are specific rules and regulations for different types of insurance coverage.

Business Use-Of-Home Expenses

To be eligible for the deduction, you must use your home office exclusively for business purposes. Additionally, it must be your principal place of business or a space where you regularly meet with clients or customers. You cannot claim expenses for a home office that you only use occasionally.

Eligible expenses may include a portion of your rent, mortgage, property taxes, home insurance, and utilities. You can also claim expenses related to repairs and maintenance. 

Office Supplies

Generally, any items used in your office or workspace for administrative or clerical purposes can be deducted as office supplies on your tax return.  Eligible items include pens, pencils, paper, staples, paperclips, envelopes, toner, and ink cartridges. Other eligible items include office furniture, such as desks, chairs, bookshelves, and electronics, such as computers, printers, and scanners.

How to Identify a Small Business Tax Write Off

It can take some work to figure out how to identify a small business tax write-off. This is especially true for those filing small business taxes for the first time.

The most common tax write-offs include travel, office supplies, and marketing. The best small business tax accountants can help you find tax write-offs. 

Do you need help with small business taxes? If so, we can help you. Don’t hesitate to visit our small business tax services page to get started today!