Small Business Tax Deductions Checklist: The Ultimate Guide to Lower Your Tax

Every entrepreneur must have a handy small business tax deduction checklist. Otherwise, they might pay more taxes than their generated revenues. Therefore, if you are one of those who want to save money, then you have come to the right place. This blog will examine some of the most extensive ways for small businesses to receive tax deductions.

As an entrepreneur or a small business owner, you must clearly understand taxation brackets and income tax management. This is one of the first things you must learn if you plan to understand some of the best small business tax deduction checklists.

Stick around to learn all you can about a comprehensive and reliable small business tax deductions checklist.

What Is Income Tax?

Income tax is a certain percentage of tax levied by the government on a citizen’s income. This is one of the most basic taxes that the government extracts from its citizens. Thus, every citizen must pay taxes.

However, some ways can help you legally lower your tax bracket. This blog is about small business tax deduction techniques you should take a swing at.

Small Business Tax Deduction Checklist

Owning a small business is an excellent step towards success. However, it does come with some of its challenges. And one of those challenges is paying tax. An ERC tax credit calculator can help you but, you need a more expert approach as an entrepreneur.

Thankfully, the government understands the plight of small business owners. Therefore, there are legal ways in which you can lower your tax bracket quickly.

Here are some techniques you can use to pay lower tax bills and keep your business running.

Home Office

The COVID-19 pandemic saw businesses changing gears. Most companies have moved away from a work-from-office module to a more work-from-home module. This shift is a significant shift that has brought some important changes.

As per IRS’ newest mandate, if you work from home, you are allowed to deduct the cost per square foot of your office space. This mandate has allowed taxpayers to deduct around $1,500.

However, it does come with specific requirements like:

• The workspace must have a clear and defined boundary.

• The workspace must be exclusive and cannot be a spare room or the side of the kitchen. 

• The home office must be used regularly to conduct business.

Therefore, this is one of the most lucrative means to save tax in this small business tax deductions checklist.

Maximizing Office Supplies 

Running an office comes with many expenses. These expenses come in the shape of office supplies. Regardless of your office working space, IRSc would allow small business owners to receive rebates on office supplies.

As per IRS mandate, small business owners can now write off office supplies as operational costs and get rebates. This is one of the most extensive and accessible means of receiving tax rebates from the government.

The office supplies that qualify for rebates include

• Printer paper.

• Pencil, markets and other writing tools.

• Computer software that you use to run your operations.

Business insurance premiums

As a small business owner, you must get your business insured. This is more than just one of the points of this small business tax deductions checklist. It is so much more than that. This point will also help you in securing your business.

However, this point is also helpful in getting tax rebates. Here are some of the insurance policies that the government will exempt:

• Cyber Insurance

• General Liability

• Commercial Liability

• Professional Liability

• Business Interruption

• Worker’s compensation

• Health & Life Insurance

Therefore, if you follow any of these policies, you can receive tax rebates. Therefore, adding to the list of strategies or small business tax deduction checklist.

Rent

Small business openers often operate out of rented properties. In fact, most small business owners operate out of their own homes or rented properties. As a result, the IRS allows business owners to get a tax reduction according to their overall rent.

This tax reduction considers your overhead costs and looks for ways to minimize them. However, this reduction is very different from the reduction in the home office. Therefore, you need to clearly understand the difference between the two.

In fact, in exceptional cases, if you live in a rented property and use your home as your base of operation, you can get a tax reduction according to the overall rent you pay.

Relocation Expenditure

Small businesses often go through the process of reallocation. This is a part and parcel of the whole deal. Therefore, the government has made specialized mandates to refund this expenditure.

If your business falls under a corporation or limited liability business, you can get the whole overhead cost of reallocation rebated. These include the cost of packing, moving, transportation, etc.

However, if you are the sole proprietor of your business, you must fulfil two criteria. Firstly, you must move at least 50 miles from the original location. Secondly, you must work for at least 39 weeks (about 9 months) in the previous fiscal year.

Also, it would be best if you remembered that this does not apply to home offices. Suppose you move from one house to another and use it as a base of operation. I am sorry to inform you that you are not qualified for this rebate.

Network Bills 

The Internet is one of the most crucial elements that businesses need to conduct their operations. In fact, the internet is the very lifeblood of the whole deal. Therefore, the IRS has decided to include this as a Tax rebate.

As of 2024, the IRS will allow smaller businesses to receive tax rebates on their bills. This is a daily new addition to the small business tax deductions checklist. However, it is trendy and is used by many small businesses.

The only requirement is to present proof that the internet and phone are integral to your business operations.

Educational Bills

Several small business owners continue their studies while maintaining a business. Therefore, the IRS has decided to rebate or refund this expense from taxes to encourage this endeavor.

As of 2024, any small business owner continuing their studies can show this expenditure and get it approved. Therefore, this is an integral part of the whole process.

However, the IRS is very clear about the parameters you need to fulfil to qualify for this tax rebate.  

• The program would further your knowledge base.

• The course is being taken from proper legal channels.

• The classes should help you explore other fields as well.

This is mainly used by people who want to finish their MBA while conducting business.

Advertising & Marketing 

Marketing and advertising have become an integral part of the business landscape. Businesses can only survive in the current market with proper marketing and advertising techniques.

Thankfully, the IRS has imposed leeways on this cost. In some cases, small business owners can even get rebates for the total overhead cost of advertising and marketing. Here are the operations that qualify for this tax reduction:

• Printing flyers, business cards, etc

• Hiring a Social Media Manager.

• Running Facebook advertisements.

• Website hosting.

Commercial vehicles 

Small businesses often use commercial vehicles to conduct their business. If you use a vehicle for business operations like delivery, etc., it qualifies to be a commercial vehicle.

Thankfully, the IRS has successfully included this rebate in their list of tax write-offs or tax deductions for small businesses. As an entrepreneur, you can gas, maintenance, tolls, etc. and get small business tax reductions.

However, you must prove that the car is mainly used for business purposes. This will enable you to get the overall tax rebate with ease.

Business Meals 

This might sound like a joke. However, the 2023 mandate has specifically included business meals in the small business tax deductions checklist. However, there are some caveats to the whole deal.

Business meals need to be related to business and business only. If you and your colleague decide to get a drink on a Friday, it will not be counted as a business meal.

Therefore, you must present all the necessary documents and the objective of the meeting. These things will get the meal approved as a business meal.  

Business Travel

If you must travel a lot due to business, then you can include these trips as a part of your tax reduction. However, the IRS has again placed strict restrictions on this variant of tax write-offs.

The trip must be business-related. Therefore, you need to present the exact documents and bills to prove your claim. Otherwise, you will not be able to receive any tax reduction.

The Final Thought 

In summation, these are some of the most prominent points you remember while formulating your small business tax reduction checklist. If you are a small business owner and want to reduce your tax bills, then you can follow the checklist. However, you need to remember that saving up tax legally is a nuanced feat. Therefore, you need to temper your expectations and approach the subject accordingly. Keep following our page for more such content.

Additional Reading:

• What Will Happen If I Do Not Pay Taxes?
• 7 Nifty Ways The 1% Use To Reduce Tax And Protect Their Assets
• 6 Real Estate Tax Advice or Steuerberatung Immobilien to Save on Taxes