3 business tax write-offs you may not know about
Are you taking all the business tax write-offs you can? Here are three tax deductions small businesses often overlook at tax time.
1. Home Office
Topping the list of overlooked business tax write-offs is the Internal Revenue Service's (IRS) home office deduction. Even though half of all small firms are home-based, only 29 percent claim this deduction.
To encourage businesses to take advantage of the deduction, the IRS has simplified the claim process, making it easier to calculate the business use of your home. If you use a portion of your home both exclusively and regularly for business purposes, you can claim $5 per square foot of home-office space, up to 300 square feet. Other deduction options factor in expenses like utilities, mortgage or rent and the percentage of your home devoted to business.
Did you know you can write off entertainment expenses? If you pay to attend a trade association meeting or entertain a client in a hospitality room at a convention, you can deduct 50 percent of the costs. The event must have a business purpose and take place in a business setting.
3. Marketing and Advertising
Whether website design or sponsorship of a local event, advertising and marketing expenses can be written off when they're reasonable and directly related to your business activities.
While you'll want to be aware of the IRS limitations around each of these deductions, they can add up to substantial savings — so make sure not to overlook them. If you're interested in leveraging these deductions, or have any related questions, you should consult with your tax preparer or a CPA.