Whether your small business is run out of a storefront or your home, you’re still responsible for paying taxes at the end of the year. When tax season approaches, you can take advantage of the same deductions billion-dollar companies enjoy and small business-specific ones to save money. Along with business accounting services from enrolled agents, you can reinvest the savings into the company or take a well-deserved vacation. 

What Tax Deductions Are Available to Small Business Owners? 

1. Home Office 

Working from home has its advantages, especially during tax season. Owners can base their deduction on the percentage of their home’s square footage dedicated to business activity. They can also claim deductibles for depreciation, repairs, insurance, mortgage interest, and utilities. 

2. Traveling Fees

Traveling fees can be defined broadly. Many use this deduction for car-related expenses, including meetings, daily commutes, or transporting materials to worksites.

There are two ways of claiming this deduction based on how well you’ve documented the expenses, how economical the vehicle is, and how much it costs to drive per year. 

Using the standard mileage rate, owners add up the miles they drove for their business and multiply it by the standard deduction rate. For 2020, the rate is 57.5 cents per mile. 

Secondly, owners can add up the car-related expenses. Combine the amounts for gas, repairs, depreciation, and insurance and registration fees. The total will be the deduction rather than the mileage. Contact a business accounting professional to help you select the most beneficial deduction option. 

Depending on the industry, business owners may also spend much of their time flying or taking trains to meet with prospective and current clients. Deductions include the tickets and hotel expenses for you and any employees who are also on the trip. 

3. Operating Expenses 

You have to spend money to make money in business. To keep it operational, owners must pay workers their salary and, in some cases, for their medical insurance. There are other fees to consider, like rent, utilities, repairs, business insurance, and legal and business accounting services. The expenses can get steep, but they're all deductible, allowing owners some breathing room when filing taxes.

4. Other Taxes

Business owners can deduct taxes from their taxes. While federal income taxes aren’t deductible, many others are. State and local income taxes, sales taxes, personal property taxes, and real estate taxes are deductible up to $10,000, according to the Tax Cuts and Jobs Act. 

Other deductible taxes include excise taxes, occupational taxes, franchise taxes, and a partial deductible on self-employment taxes. 

For nearly 30 years, Grayson Accounting, LLC has proudly helped small business owners save money on their taxes. Located in St. Charles, MO, they offer personalized services at affordable rates. Their enrolled agents stay updated on the latest changes to the tax codes, laws, and regulations. They will also represent their clients before the Internal Revenue Service (IRS) if necessary. For more information on their business accounting services, visit their website. To schedule an appointment, call (636) 233-7875.