You've probably heard the expression, "It's not what you make; it's what you keep that matters." One of the ways you can keep more of your business income is by reducing the taxes you pay. While taxes may not be foremost in your mind this time of year, business people who pay the least tax are those who are aware of deductions throughout the year and who, long before filing their tax return, gather adequate records to back up the deductions they claim.
Business expenses are deductible if they are costs you wouldn't have had if you didn't have your business. While it never makes sense to spend money in order to reduce taxes, in the course of running your business, you will probably find that you have at least some of the following deductible expenses:
· Equipment and furnishings
· Dues and Fees
· Meals, Entertainment, and Gifts
· Legal and Professional Fees
· Office and Computer Supplies
· Printing and Postage
· Travel
· Seminars and Conferences
· Magazines and Books
· Maintenance and Repairs
· Insurance
· Rent and Utilities
· Telephone and Internet Fees
· Advertising and Promotion
· Uniforms and Work-Specific Clothing
· Vehicle Expenses
· Employee Wages
· Payments to Independent Contractors
You probably have other deductible expenses too, those that are specific to your type of business. In addition, you may be eligible to claim a home office. You can take this deduction if you have a space in your home that's used regularly and exclusively to meet with clients or to do the administrative work for your business. If you claim an office-in-home, the business percentage (based on the amount of your home that's used for business) of all related expenses (e.g. insurance, real estate tax, mortgage interest, rent, utilities, and maintenance costs) can be deducted. Even if you don't claim a home office, you still can deduct the cost of equipment and furniture you use in your business, as well as business phone expenses.
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