Top 4 Small Business Tax Deductions
No matter what industry you’re in, you know part of your earnings will go toward taxes. Managing this debt is a core concern for every small business. Knowing which small business tax deductions to use can improve your company’s financial position. You should always consult a tax professional about major changes to your tax strategy, whether personally or for your business. But these four popular deductions can be a good starting point for your next conversation.
1. Self-Employment Tax Deduction
Every worker pays Social Security and Medicare taxes. These are often referred to as payroll taxes or Federal Insurance Contribution Act taxes. For employees, the total amount owed is split between the business and the individual.
People who are self-employed have to pay both parts of this tax themselves. This can mean a major cost, adding up to 12.4% of gross pay for Social Security and 2.9% for Medicare.
There’s no way to directly avoid this double dipping. However, Forbes senior contributor Kelly Phillips Erb highlighted an easy deduction that can reduce the cost. Line 27 on the front page of your personal tax return allows you to deduct 50% of your payroll tax payments. While you’ll still have to pay your FICA taxes, you can at least lower your personal tax burden.
2. Rent Deduction
Many small businesses rent space instead of purchasing it. This is especially common for new companies that don’t have the cash available to make a major real estate purchase. You can deduct the cost of renting any business space from your company’s taxes, Small Business Trends pointed out.
This doesn’t just mean your main facility or place of work. If your company has a separate workshop and storefront, for example, you can fully deduct the rent costs of both.
3. Vehicle Deduction
A car is vital for some small businesses. A truck or van is essential for others. No matter what type of vehicle you use for business, you can save on your taxes by tracking use.
This small business tax deduction involves two options for recording mileage and other expenses. You could record all the costs tied to the vehicle, from oil changes to repairs and insurance. The other option is only tracking the mileage and using the standard IRS per-mile rate of $0.58.
Many small business owners choose the mileage deduction because it’s a much simpler process. You need to keep an accurate record of mileage associated with work travel, but not all of the other bills and documents.
Remember that a personal vehicle can be used for work purposes, but only the mileage directly connected to your business can be deducted. That excludes commuting to and from work at the beginning and end of each day.
4. Repair and Maintenance Deduction
Repairs at your business can be costly and unexpected. There are all kinds of maintenance that eventually need to be completed. Financial advisor Dave Ramsey provided the reminder that any and all repair and maintenance costs can be deducted from business taxes.
Funding to Power Business Growth
Small business tax deductions can help your company save money and keep more cash. But tax savings aren’t always enough to provide the financial support needed for major projects or to seize an excellent opportunity.
At QuickBridge, we make funding smarter. We offer fast short-term financing, including business tax debt loans that are suited to your specific needs. Our loan specialists provide easy access to the funding you need for equipment, internal property upgrades, or similar expenses that would qualify for the business loan Section 179 deduction.
QuickBridge is here to help your small business access the funding that’s so vital for stability and development. Get in touch with us today to learn about our fast, secure, and accessible lending options.
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