If you did your homework before diving straight into your business, you’ll know that you can count your raw material expenses in your tax deductions. However, this is just one facet in the large and complex world of tax law. You may not know it, but many of these laws are subject to different interpretations, and you can deduct almost any cost that contributes directly to the success of your business. Here are a few deductions you didn’t know about before.
First of all, insurance deductions. The insurance you have on both your car and home can be partially deducted from your business income. However, you’ll only be able to claim these when you actually use your car and home for business purposes. When you’re filing your returns, it’s essential that you document how you use both of these in the context of your business. For example, if you use one room in your home as a designated office, the precise area of that room has to be recorded. If your home office is fifteen percent of the square footage of your entire home, then fifteen percent of your home insurance can be deducted from your taxable income. Tax law experts like Joe Callahan at MCC4Tax are constantly reminding their clients of these deductions, so make sure you’re looking for them the first time around!
Travel deductions are another valuable deduction which many business owners fail to take advantage of. Even if you take a trip that isn’t 100% for business purposes, the cost of it can still be tax deductible. For example, if you were visiting family and do the odd freelance travel writing job, you can deduct the whole trip so long as you generated some income from the article. Or, if you happened to be in an area and met one of your clients for a meal, you can legitimately deduct your travel costs from the trip. The important thing, just like insurance deductions, is to document how and when you served your business in your travels. It’s also important that the income outweighs the deduction you’re planning to claim.
Finally, loan interest deductions. For all their brilliant ideas, many inexperienced entrepreneurs don’t know that their loan interest is deductible. If you have some kind of line of credit for your small business, then the interest on this account may also be deductible, depending on the business’s annual income. The interest tied to large student loans may also be deducted if your income qualifies. Even the interest on auto loans can be deductible depending on your circumstances. As you can imagine, the different tax regulations tied to each of these loans can get pretty complex and hard to understand. To ensure you’re saving as much as possible, talk to a professional advisor like Victoria Abramov at Berdon about the loan interest you may be able to deduct. It could save you a small fortune!
There you have just a handful of deductions some business owners aren’t aware of. Do some thorough research, and don’t lose out!