All businesses live and die by cash flow. That’s why business owners need to embrace strategies that can help them maintain healthy cash flow. One of the simplest ways to achieve the needed savings in your business is to ensure you’re claiming all of your tax deductions. Here’s a list of tax deductions you may qualify for and how you can take advantage of them.
Insurance Deductibles
Does your business have any insurance? If yes, you can take advantage of your business insurance to cut your income tax. Common business insurance deductibles include workers’ compensation, business interruption insurance, or business property insurance.
Startup Expenses
The IRS categorizes the money spent when starting a business as a capital expense. Meaning, if your business startup cost was $50000 or less, the IRS allows you to deduct up to $ 5000 in your first year of operation. This includes the cost you incurred in promoting your new business, training, and traveling.
[mpp id=”4″]
Home Office Expenses
You don’t necessarily need a physical office to run your business. You can do it from your home. What’s more, you can use this to your advantage. The IRS allows you to deduct $5 for every square foot of your house used as an office.
However, your home office must be used regularly, and it should never be used for any other activity besides business. Therefore, be sure to have the measurements of your home office ready in case the IRS asks for them.
Hire Your Kids
Are your kids old enough to work? If yes, you can hire them to save you money on taxes and keep most of it in the family. When filing your business taxes, be sure to deduct their salary as business expenses.
Even better, your kids will only get to pay their taxes if their salary is above the standard deduction. First, however, ensure you complete the W-2 to avoid getting into trouble with the IRS.
Energy-Efficient Investments
In addition to keeping the environment clean, using energy sources with low pollutants can help you cut energy costs and keep your income taxes at the lowest end. For example, if you use solar energy or wind energy to run your business, the IRS will recognize your efforts and give you a tax credit.
Bad Debt
Are some of your customers unable to pay for the service or product that you provided? If yes, then those debts are referred to as bad debts. The good news is, you can deduct the bad debts when filing your next business taxes.
Bonus Point: Interest Rate
You can also deduct the interest charged on a business loan taken from a financial institution.
There you have it; A list of tax deductibles that can help you cut your business out-flows and improve your cash flow. Make sure you make the most out of them.
