As a small business owner, it’s important to take advantage of any tax deductions you may qualify for. Doing so reduces your taxable income, which can have a major impact on your company’s health. When you begin your tax return preparations, make sure you account for the below options if they’re applicable.

Tax Deductions You May Qualify For

1. Vehicle Expenses

If you use a vehicle for business, you can deduct the cost of gas, oil changes, and other maintenance, provided you keep diligent records. Otherwise, you have the option to take the standard deduction.

2. Payments to Independent Contractors

Many small businesses rely on independent contractors throughout the year. During your tax return preparations, remember that payments made to them are deductible. If you paid them more than $600 last year, you’ll need to send them a 1099-MISC form. 

3. Rent, Home Office & Utilities

Whether you rent a space or have a home office, you can deduct your rent or a portion of your mortgage. You can also take off for utilities like electricity, but deductions are trickier for home offices. It’s beneficial to work with a tax advisor to ensure you’re doing everything correctly.

4. Interest On Business Loans

The interest on small business loans is deductible, but it can get complicated when interest on investments or passive income are involved. As such, it’s wise to work with a tax advisor who can guide you through your tax return preparations.

5. Insurance

Business insurance, whether it’s malpractice coverage or a continuation policy, is fully deductible. Health insurance, however, is not. Instead, small companies can receive tax credits for up to 50% of their premiums. If you’re self-employed, your health insurance premiums are taken on your personal tax return rather than your business one.

If you’re feeling overwhelmed by the process in Kailua-Kona, HI, Daren Katayama CPA LLC can work with you to ensure you’re taking advantage of all the deductions listed above and any more that apply. In addition to their tax return assistance, they also offer accountant and bookkeeping services. Don’t let your tax return preparations stress you out this year. Call (808) 329-6635 to schedule an appointment, and visit their website to learn more about their tax planning services.