Things You'll Need:
- Understanding basic business tax structure
- Professional Tax Consultant to provide you the right advise
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Step 1
Deduction 1: Startup and Organizational Costs:-
When someone begins a start-up business, he or she often incurs expenses just to get the business up and running. As part of the American Jobs Creation Act, taxpayers can deduct up to $5,000 of start-up costs and $5,000 of organizational expenses incurred in the first year of their small business. If your business is eligible for this deduction seek professional help to claim the rightful amount. -
Step 2
Deduction 2: Home Office Expenses:-
A home office must be a separate room in business owner's home to do business and accounting. Part of a living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. -
Step 3
Deduction 3: Personal assets used for business purpose:-
Business owners who use their personal computer for business purpose can claim deductions for depreciation on the fair market value of such assets. -
Step 4
Deduction 4: Expenses on Business Vehicle:-
You can claim deduction on expenses for vehicle used for business purposes. There are two ways to take a vehicle expense. One is to take the mileage basis use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, one can also depreciate the vehicle. -
Step 5
Deduction 5: Advertising & Promotional Costs:-
Costs involved in preparing Business cards, newspaper ads, information packets handed out, free samples, flyers, product testing, videos and CD's all can be claimed under business expenses and are tax deductable. Money paid to hire temporary help with promotional activities like delivering flyers, product, stuffing envelopes or for even cleaning office and car, etc. can also be claimed under business expenses. -
Step 6
Deduction 6:Travel expenses related to business:-
Unreimbursed travel expenses are tax-deductible. The IRS recommends keeping a log of your expenses and receipts. You can't write off expenses for family members or friends if they accompany you, unless they are employees and are professionally involved in the business end of the trip. -
Step 7
Deduction 7: Research and Experimental Costs:-
Costs of research and experimentation may be deductible if it is chosen not to list them as capital (long-term) expenses. There are many restrictions and qualifications relating to this deduction. -
Step 8
Deduction 8 : Communication expenses:-
Cost incurred for business related communication for usage of Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet can be claimed as deductions. -
Step 9
Deduction 9: Gift Expenses:-
Expenses incurred for gifting to clients and business partners can be claimed as deduction, provided the gift is for business reasons and not to a family member for personal purpose. -
Step 10
Deduction 10: Donations made to Charities:-
Any funds donated to charities can be claimed as tax deductions. Keep the receipts of such expenses in order to get a relief on your tax burden. -
Step 11
Deduction 11: Miscellaneous Expenses:-
Many small expenses are left out as owners feel they are too small to make a dent in the tax liability. But multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the federal fund. Such small expenses includes - dues and subscriptions to professional and trade related magazines, education expenses to improve skills, laundry & cleaning bills for business related clothing, other miscellaneous stationaires like paper clips, bank charges, credit card charges etc -
Step 12
Deduction 12: Retirement Plan Costs:-
As owner of a small-business and having recently established a retirement plan for the business, the business may be eligible to receive a non-refundable tax credit for expenses incurred to implement the plan. -
Step 13
Deduction 13: Software Deductions:-
Software normally must be written off over three years because it will serve your business for more than one year. Section 179, however, allows small businesses to fully deduct off-the-shelf software the year it is purchased, as long as it is used the same year. -
Step 14
Deduction 14: Legal and Professional Fee Deductions:-
Accountant and attorney fees are deductible as business expenses. Sole proprietors can write off fees from tax professionals on Schedule C or Schedule C-EZ. For sole proprietors, any additional expenses can be deducted on Schedule A of your 1040.Check with a tax professional for more guidance on interpreting these IRS options. -
Step 15
Deduction 15: Disability Access Costs:-
Incase improvements or remodeling has taken place for business facility to accommodate customers and employees, business becomes eligible for a deduction for these expenses.
