If the fiscal year of your business ends with the end of the calendar year, it's not too early to start thinking about tax time, and more specifically, deductions. Business tax deductions are dependent on sound accounting habits, so you want to make sure you're on top of capturing expenses throughout the year. But if that hasn't been the case, worry not! Now is a great time to get caught up on expenses. But in the meantime, here's a quick rundown of some of often overlooked business tax deductions...
This seems a natural place for us to start! Did you know the cost of your accounting software is deductible? Same goes for other services your business uses like web hosting, domain registration, payroll costs, etc. While these deductions aren't your typically "surprising" examples, they don't immediately come to mind. So remember: accounting software is a deductible expense! (And for your folks contemplating signing up for Kashoo, know that your subscription is a business expense!)
If you recall our recent post that touched upon bad debt, there's a silver lining: bad debt is usually something you can write off. So when you've exhausted all your options to get paid, the next best choice is to write it off as bad debt. Here's the catch though: bad debt on goods can be written off, but if you're product is a service (i.e. your time), then it can't.
Use a credit card to pay for business purchases? The interest on that is deductible! This may seem like a complicated number to figure out, but it's worth pursuing. (Every tax deduction is!)
Most folks who work for themselves also purchase their own insurance. After all, you are the company! But here's the good news: if you work for yourself, your health insurance premiums are tax deductible. This will help you out on your personal tax filing as well.
Remember when we talked about cost of good sold? Guess what. COGS are tax deductible. Boom.
Take any courses to improve your skills? Buy any business books or other literature to better your enterprise? Go to an industry conference this year? Good news... all tax deductible!
Non-Staff Hired Help
If you hired (and paid) an intern, a contractor, a freelancer, etc., what you paid them is tax deductible. In the U.S., if you pay a contractor more than $600 in a year, it needs to be reported. (And you need to give that contractor a W9!)
Naturally, there's more to this list, but we'll save it for later. 'Til then, happy expense capturing!