The Internal Revenue Service may have delayed tax season, but that doesn't mean business owners shouldn't begin preparing. One of the most important things when filing is deductions, as these can save a company money.
Tax law makes numerous deductions available to businesses, and these are some of the best ones:
Business owners who run their company from home can take advantage of certain tax deductions, according to Bankrate.com. The IRS says this must be a pace devoted to the business and nothing else, however, some experts claims a home office can be part of a room. To determine how much is deductible, business owners need to measure the work area and divide it by the square footage of the house, and multiply that by total home-related business expenses, such as mortgage, insurance and electricity.
If a person's business requires them to travel via car, some of these expenses can be deducted on a tax return, according to NOLO. There are two methods for claiming auto expenses:
- Actual expense method: Business owners keep track of and deduct the actual business-related costs
- Standard mileage rate method: A certain amount of money is deducted for each mile driven, plus any other tolls and parking fees
Many business owners use credit to finance purchases. In this case, the interest and carrying charges on the cards is fully tax-deductible. This deduction is limited to credit cards, as business owners can also deduct interest on a personal loan that was used to cover business expenses. However, it is important that records are kept to prove that these funds were used for company-related expenses, or else it may not be deductible.