We all like Tax deductions, and your Outsourced Bookkeeper and CPA are well positioned to help identify the 25 Key Tax Deductions for your business. But it’s important to have the conversation with your accounting professionals now, so that your CPA can advise, and your Bookkeeper can track for you now.
Quality Bookkeeping Services firms such as Estmere can meet with you and your CPA to ensure that the 25 key Tax Deductions for your small business are identified are tracked and accounted for throughout the year, so that when reporting season rolls around the hard work is already done.
With the ever-changing tax laws, it’s essential to stay up-to-date on the latest deductions available to your small business. Generally speaking, here top 25 tax deductions every small business should know about in 2023.
- Home office deduction If you have a designated area in your home used exclusively for business, you may be eligible to deduct expenses such as rent, mortgage interest, utilities, and repairs.
- Business use of a vehicle Expenses related to the business use of a vehicle such as gas, repairs, and insurance are deductible. You can choose to deduct the actual expenses or use the standard mileage rate.
- Retirement plan contributions Contributions to your retirement plan are tax-deductible, allowing you to save for retirement while reducing your taxable income.
- Health insurance premiums If you pay for your employees’ health insurance, you may be eligible to deduct these expenses as a business expense.
- Advertising and promotion expenses Expenses related to advertising and promoting your business, such as website design and marketing materials, are deductible.
- Business travel expenses Expenses related to business travel, such as airfare, lodging, and meals, are deductible.
- Education and training expenses The cost of attending seminars, conferences, and other training programs related to your business are deductible.
- Legal and professional fees Fees paid to lawyers, accountants, and other professionals for services related to your business are deductible.
- Office supplies and equipment Expenses related to office supplies and equipment such as computers, printers, and software are deductible.
- Charitable contributions Contributions made to qualified organizations are deductible as a business expense.
- Depreciation The cost of long-term assets such as buildings and equipment can be deducted over their useful life through depreciation.
- Startup costs Expenses incurred during the startup phase of your business, such as market research and legal fees, are deductible.
- Bad debt If you have customers who have not paid their bills, you may be able to deduct these losses as bad debt.
- Business insurance Premiums paid for business insurance, such as liability and property insurance, are deductible.
- Licenses and permits Fees paid for business licenses and permits are deductible.
- Rent Rent paid for business property is deductible.
- Taxes State and local taxes paid on business income and property are deductible.
- Meals and entertainment Business-related meals and entertainment expenses are deductible up to 50% of the cost. In some cases (e.g. employee meals) deductions can be up to 100% so it’s important to record these accurately and separately from each other.
- Employee wages Wages paid to employees are deductible.
- Employee benefits The cost of employee benefits, such as health insurance and retirement plans, are deductible.
- Gifts Business-related gifts up to $25 per recipient are deductible.
- Professional dues Dues paid to professional organizations related to your business are deductible.
- Interest Interest paid on business loans and credit cards is deductible.
- Utilities Expenses related to utilities such as electricity, water, and gas are deductible.
- Telephone and internet The cost of telephone and internet services used for business purposes is deductible.
In conclusion, these top 25 tax deductions every small business should know about in 2023 can significantly reduce your taxable income and help you save money.
However, for you to be able to claim these deductions fully, they must be tracked accurately (and separately) in your Profit and Loss, and reported through to your qualified tax professional for action at the end of the financial year; while ensuring compliance with all applicable tax laws and regulations.
By taking advantage of these deductions, you can minimize your tax liability and reinvest those savings back into your business.
