With all the hardships 2020 has brought, people can’t help but wish for the year to be over. Though we’re still about halfway through that year, 2021 hopefully brings a fresh start. But with every new year also comes the new tax season. Are you prepared for it?
Fortunately, you don’t need to worry about your business’ taxes for a few months yet. Still, it’s best to go in prepared, especially when you realize you might not be utilizing the tax breaks you’re eligible for. Dozens of tax deductions are available for business owners, some well-known, while others are barely filed. However, these often-overlooked tax deductions can mean thousands of savings for businesses if only they were claimed.
Don’t leave the following tax deductibles for your business unclaimed next tax season:
- Company car expenses
With the exception of commuting to and from work, the mileage you incur from using your car for business-related trips is tax-deductible. These trips might include:
- Visiting clients or customers for business purposes
- Going to business meetings out of the office
- Going from the office to any other place for business purposes
For these expenses to be deductible, you must be diligent in keeping records of the mileage and expenses incurred for each trip.
- Hiring certain types of employees
The government rewards organizations that hire members of disenfranchised populations or those who face certain challenges to employment. This deductible is called Work Opportunity Tax Credit and benefits companies that hire:
- Qualified IV-A recipient
- Qualified veteran
- Former felon
The deductible will be credited against your share of the employees’ Social Security tax.
- Energy efficiency
Running an energy-efficient organization will not only save your business utility costs, but it can also give you tax breaks. One common example is buying solar panels for your business. This use of solar technology will get you 30 percent tax credit, just like using small wind turbines, microturbines, and fuel cells.
- Software subscription
Does your office use pieces of software you need to pay for as a subscription? Applications like Slack, Microsoft Office 365, and Oracle are vital tools in plenty of businesses. Their use is also subscription-based. Since they are essential to business, you can deduct their subscription cost, as well as the expenses for technical help, installation, or maintenance, from your business’ taxes. You must be able to prove you use these pieces of software at work in order for you to write them off.
- Business meals
Now and then, you’d need to take a client out for lunch to hash out details of your business in a more relaxed setting or to simply thank them for doing business with you. You can also deduct meal expenses if you had lunch or dinner with employees as long as you’re conducting business operations. You can write off 50 percent of these expenses from your business’ taxes.
There are plenty of ways to save money while operating a business. Maximizing your tax credits is one such way, allowing you to reduce your expenses without having to compromise anything.
Meta title: Is Your Business Writing Off These Tax Deductions?
Meta description: One of the best ways to save money in business is to maximize your tax deductions, We have a few examples below.