Accounting And Payroll

10 Tax Deductions Businesses Can Claim

As a business owner, are you looking for ways to lower your taxes legally?

Good news! 

Businesses can claim all sorts of tax deductions. These deductions lower the business’ taxable income. This way, owners can provide the best for their business and employees without having to spend a fortune. 

But what is considered tax-deductible? 

Here, we’re going to look at the 10 tax deductions businesses can claim. 

So are you ready? Let’s get started! 

1. Free Meals

Providing your employees with free meals is deductible by 50%. 

However, it has to fall under these categories:

  • Provided meals are essential to business operations. For example, offering lunch while employees are at work or dinner for overtime workers.
  •  Provided meals should NOT be sumptuous and overly expensive. Hearty meals that fill the stomach should be enough.
  • Provided meals should be available only to the owner or the employees. No one else. 

As for business outings or parties, the meals are 100% deductible. To avail of that, keep a proper document of the expense, date, time, venue, and persons’ that took part. 

2. Employee Payments

You can claim tax deductions for salaries, paid vacations, and other employee benefits. 

To do that, you have to follow the criteria:

  • The prices should be reasonable and necessary. 
  • The employee should NOT be an owner, associate, or member of the LLC (Limited Liability Company). 
  • The employee should provide services that earn the payment. 

3. Business Travels

Traveling for business purposes allows you to deduct from your overall taxes. 

(Keep in mind that these deductibles are only for trips that are directly related to your business and are absolutely necessary.)

If so, authorized deductibles include:

  • Transportation to and from your destination, including cars, buses, taxis, trains, and planes. 
  • Accommodation while on the business trip, including meals and tips. 
  • Luggage expenses, including the shipment of business samples and exhibition products. 
  • Travel fees, including parking and toll expenses. 
  • Other business essentials related to the trip.

4. Business Vehicles

Vehicles used for your business alone are 100% deductible. 

However, any personal use of these vehicles won’t be counted in the deduction. 

To calculate this tax deduction, multiply the miles used for your business by the IRS’ (Internal Revenue Services) allotted amount per mile. 

5. Professional Help

The fees you pay to bring in professional help are approved for business tax deductions. 

Some of these professionals include:

  • Contractors
  • Freelancers
  • Accountants
  • Bookkeepers
  • Tax Preparers
  • Tax Software such as the UltimateTax Software
  • Lawyers

6. Rental Payments

You can deduct rental payments from your business taxes. These rentals include buildings, offices, warehouses, shops, stalls, etc…

Bear in mind that this does NOT include home rent if you use your house as an office. 

For home office expenses, you have to apply for a special deduction. Even so, it won’t be 100% deductible. 

7. Equipment Payments

The furniture and other equipment you buy for your business are tax-deductible. However, there is a cost limit to avoid overboard expenses. 

Technology equipment, such as telephone and internet providers, are tax-deductible, too. 

Again, if you use the telephone or the internet for personal reasons, that won’t count in the deduction. To avoid confusion, consider installing another line devoted to your business alone. 

8. Bank Payments

As for business bank accounts, transfer fees, overdraft fees, as well as annual and monthly fees are all tax-deductible. 

The same is true for business credit cards and payment processors, such as Paypal and Stripe. 

A business owner’s, or an employee’s, personal account or credit card is NOT covered. 

9. Promotional Payments

Payments made to promote and advertise your business are part of the 100% tax deductions. 

These payments include:

  • Starting a business website
  • Hiring a logo designer
  • Implementing an online marketing campaign
  • Printing business cards and brochures
  • Buying an ad space 
  • Mailing business advertisements to customers

Spending for a political campaign or event is not included in this deduction, even if it’s under your business’ name. 

10. Insurance Payments

Finally, payment for business insurances is also approved for tax deductions. 

These insurances include:

  • Liability insurance 
  • Buildings, facilities, and furniture insurance
  • Business interruption insurance 
  • Business vehicle insurance 
  • Malpractice insurance 
  • Employee health insurance
  • Employee life insurance
  • Employee compensation insurance

Conclusion

Looking for ways to lower your business taxes significantly?

Utilize these 10 tax deductions every business has a right to claim. 

With this, you’ll be able to provide the best for your business, employees, and customers.