One of the great things about starting and running a small business is that the Internal Revenue Service (IRs) provides a host of incentives to keep you in the black. With a variety of tax deductions to help keep your company profitable, it behooves you to understand exactly what you can honestly deduct for your tax payouts. In order to stay free and clear, always stay on the right side of the IRS with these three major deductions.
Home Office and Supplies
Your first step in understanding tax deductions for small businesses is to become acquainted with the idea of a home office. So long as the space claimed as a home office is used only for your business-related work, you can claim it as an expense to treat it as a deductible. Many people find themselves putting up flares for the IRS, though, when they attempt to claim something like a family room as the home office. You may be able to treat a corner of that family room as the deductible area, but you must be able to prove that the space is used only for support of your business.
The supplies you purchase solely for work-related use are deductible, but it is crucial that you save your receipts. Keeping these receipts organized from the beginning will help to streamline your tax process.
Furniture
The furnishings used in your office or business can be treated as tax deductions, too. There are two methods for claiming them. First, you may consider writing them off for a chunk in the year of purchase. This requires using section 179 of the tax form. If you prefer to treat the furnishings as a depreciation, simply consult the IRS-provided chart to determine the equal distribution over 7 years.
Equipment
Any equipment that provides solely for your business can be treated as a tax deduction. You may choose to handle each as a single unit over the purchase year or to depreciate them as you would furniture. The depreciation term is 5 rather than years.
Just about any small business will have expenses for home office, supplies, furniture, and equipment. Treating these as tax deductions is not only perfectly reasonable—it is also crucial to helping your business succeed. Understanding what you may deduct and keeping excellent records from the very beginning should streamline your process. In all cases, make sure that you follow IRS stipulations carefully. Those who have tried to skirt the truth in such issues, usually end up losing much more than they may have hoped to save.