It’s that time of year again—tax season! Small business owners everywhere are scrounging around for old receipts and frantically doing paperwork in preparation for tax day, all while keeping up with their regularly scheduled CEO duties. Amid all the craziness, it’s easy to miss out on some great write off opportunities. But anything that can save your business some money is worth the extra time and research.
Here are a couple small business deductions you don’t want to miss this year:
Just Getting Started
By simply starting your business, you can manage to dig up some tax deductions. There are a lot of expenses that go into starting a business: equipment, maintenance/repair, marketing, continuing education and utilities are all things that can be deducted because they’re capital expenses. Just make sure that your doors are officially open and you’re actually conducting business, and you could get up to $5,000 the first year you’re in business. Anything left over has to be deducted in equal amounts over the next 15 years.
It’s common in business to reimburse your employees for expenses: gas to a meeting, hotel expenses for business trips, other forms of transportation, baggage fees, meals for client lunches, etc. These reimbursements are all deductible. Just be sure to have an “accountable plan” in order to claim your deduction. An accountable plan shows that the expenses were indeed business-related. Along with the accountable plan, you should also keep the appropriate documentation of the transactions (receipts, for example) in case the IRS wants to check in. Employees must also validate their expenses within 60 days and give back any excess within 120 days.
For the self employed, Individual Retirement Plans (IRAs) can be the best write offs. If you don’t have any employees, you can set up an individual 401(k). In 2014, a person could contribute $17,500 as a 401(k) deferral plus an additional 25% of net income, suggest John Hillis, president of Hillis Financial Services.
And if you do have employees, try a Savings Incentive Match Plan for Employees (or SIMPLE). SIMPLE is an IRA-based strategy for small business owners making contributions to their small business employees’ retirement plans.
Related Article: Retirement Plans for the Small Business Owner: The SIMPLE Plan
Retirement plans are a great tax deduction. Take advantage of the fact that the government is willing to help fund retirement.