For small business owners and their accountants, tax time is an opportunity to calculate the company's expenses and determine which deductions are applicable. Business owners should take advantage of all available options to reduce their taxable income as much as possible. Here, the tax preparation team at Dianne M. Saunders, CPA of Litchfield, CT, discusses some of the deductions commonly taken by small businesses.
3 Business Deductions Recommended by Tax Preparation Professionals
1. Vehicle Expenses
Small business owners can claim expenses for any vehicle that their business owns or uses for work purposes. They can either deduct all the expenses related to business use or the standard mileage rate for all miles driven and other operating costs. It is important to keep personal and business expenses separate, as only work-related vehicle expenditures are deductible.
2. Entertaining Costs
Although going out to lunch with colleagues is not tax deductible, bringing a client or prospective client allows you to deduct 50% of the cost. Going out for drinks or seeing a sporting event also counts if the event is related to or associated with the company. Small business owners should keep track of the purpose of their outings on their receipts.
3. Travel Expenses
Small business owners who travel can claim many associated expenses including the airplane and taxi fare, lodging, and meals. However, local commuting costs cannot be deducted. If family members join you on the trip, you can only include your own expenses for tax purposes.
The team at Dianne M. Saunders, CPA has over 20 years of experience in preparing tax returns and providing meticulous bookkeeping services. They will make filing your business returns easier than ever, so you can focus on growing your business. Call (860) 567-3022 to speak to a dedicated tax consultant. You can also visit the firm’s website to learn more about their tax preparation services.