Top Tax Breaks for Small Business Owners

As a small business owner, you are always under a lot of pressure to balance the books and make the payments to suppliers and vendors. That’s why any tax break from the government could be so helpful in your situation.

​The government wants to actively support and encourage small businesses and provides them with a number of tax breaks. Let’s look at some of the things you can write off as a small business owner. 

Business Travel Expenses

You can write off business travel expenses. This means you can write off any expenses incurred on air travel, either by you or by your employees, as long as it is for purely business reasons. Mind you – it is not always simple to get travel write-offs for small businesses. But do read the document published by the IRS, the IRS Publication 463, for the details on this. Also, you can only write off out of town travel, not the cost of local commutes to the office.

Home Office Expenses

Are you running your business from your home office? It is not unusual for many online businesses to be run from a home office. So if you are making use of a room or two in your house for business, whether to meet clients, to store servers or any office equipment, you can write-off several expenses based on that. This means you can write-off a part of the mortgage costs, costs related to painting and renovation of the home office, etc. 

Insurance Expenses

You can write off the expenses incurred by certain insurance policies related to the business, such as the health coverage for self-employed business owners, business owner’s policy, and malpractice coverage. You can get a tax credit of about 50% on the premiums. This is not the same as a write-off or a tax break, but serves the purpose well enough.

Staff Salaries and Other Expenses

​You can write-off any expenses related to the salaries and bonuses paid to your employees. Mind you, any salary or bonus that you pay to yourself is not tax deductable. 

Office Rent Expenses 

One of the biggest expenses incurred by small businesses is the rent on their premises. You can write-off the rent on your office, store or factory.

Contract Labor Expenses

Are you hiring freelancers or contract workers for specific tasks?  The cost of hiring the contract labor can be deducted provided the Form 1099-MISC is issued to all contractors who get payments of $600 or more from you.

Depreciation Expenses

As per Section 179 you can write off all expenses related to equipment purchases of $500,000 or less. You have the right to ask for a 50 percent depreciation on any business property or machinery.

Supplies and Other Expenses

One common deduction is any write-off on business supplies such as office stationery, printers, cleaning supplies, etc.

Business Lunches and Other Expenses

​You can write off the cost of business lunches and entertainment provided on business purposes for up to 50 percent. 

So these are just a few examples of how you can save money by writing off some of your business expenses. You can subscribe to our cloud-hosted accounting services such as QuickBooks, Quicken and Sage 50 Hosting for more savings.