Tax day is just around the corner! For small business owners, filing taxes can be stressful and expensive. When every penny counts, it can be detrimental to your business if you accidentally pay more than you owe. Nobody expects you to stay on top of all the latest tax regulations, however, knowing some of the basics can help you save money and invest in the future of your business. If you’re looking to save the maximum this season, consider the following ways to pay less.
Utilize Tax-Filing Software
Tax professionals can be costly for filing even the simplest returns so consider using tax-filing software instead. Investing in tax software is less expensive than recruiting a professional and helps avoid the stress and confusion of attempting to file for your business on your own. Even if you consider yourself to be a tax expert, filing your small business taxes using a third party software will help screen mistakes and avoid potential fees down the road.
Deduct Business Equipment
Section 179 allows small business owners to deduct the entire depreciation amount for business equipment in the tax-year it’s purchased, instead of a portion of the expense based on straight-line depreciation. As a small business owner, this tax break lessens the burden of purchasing new equipment. Examples of eligible purchases include machinery, furniture, technology, company vehicles or anything that helps you run your business. If you take advantage of Section 179 you’ll reap the full tax benefits of your purchases quickly and save more on your taxes.
Deduct Your Home Office
Many small business owners conduct business operations from their home. If you use a home office to run your business, you may be eligible to deduct your work-from-home expenses this tax season. Costs incurred such as internet access, utilities, maintenance, printing, and telephone bills can all be filed as deductions if specifically used for business. The best way to avoid triggering a tax audit is to section off your work space from your living area. Having a distinct office space will help separate applicable costs and make the process of calculating the percent of rent and other expenses incurred due to business purposes more apparent.
Deduct Travel Costs
Many small business owners accumulate travel expenses throughout the year. While you can’t deduct family vacations to Disney, you can deduct costs associated with running and expanding your business. Car rentals, lodging fees, airfare and mileage on your own personal vehicle are all examples of costs that are fully deductible when filing your small business taxes. In addition, educational and networking conferences in your industry are typically accepted as deductions because they fuel business growth.
Donate to Charity
As a small business owner it’s rewarding to give back to the community that supports you! However, that’s not the only benefit. Charitable donations can also be deducted on your taxes. It’s a win-win. Building strong relationships in your community can be critical to achieving your long-term goals.
As a community bank, we support your small businesses and our local community. Lakeland Bank offers information on business banking, loans and financial planning on our website.