6 Small Business Tax Deductions You Could Be Missing Out On

6 Small Business Tax Deductions You Could Be Missing Out On

Reading Time: 2 minutes(Last Updated On: March 4, 2020)

Not many business owners enjoy tax time, but it’s something that has to be done on time and done accurately. It can be a burdensome and difficult task. It’s not all bad though, as many small businesses are eligible for attractive tax deductions.  Unfortunately, many of these deductions remain unclaimed by business owners.

Make sure that you are claiming all tax deductions that are relevant to your business. These are the top 6 deductions that are missed:

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1. Startup expenses

Any expenses that you incurred before you officially launched your business can be claimed on your tax return. Some examples of such expenses are:

  • Product testing costs
  • Training courses
  • Lawyer or accountant fees related to your business

These startup costs, up to $5,000, can be deducted during your first year in business. Any startup expenses exceeding $5,000 can be amortized over a period of 15 years, up until $50,000. Thereafter, limitations apply.

2. Carryovers

If you were unable to apply certain tax deductions in previous years, you can carry them over. These include charitable contributions, capital losses and any large purchases that need to be amortized over multiple years. Unfortunately, many business owners forget about these carryovers at the next tax time.

3. Bank charges

You can deduct for many bank charges, for example check ordering, ATM withdrawal and annual credit card fees.

4. Home office costs

If you run your business from home, you can often claim a tax deduction for the following home-office expenses:

  • Percentage of your rent/mortgage
  • Electricity
  • Heat
  • Insurance
  • Portion of personal internet and phone costs, if used for business

This deduction often remains unclaimed because two strict conditions apply:

  1. A specific space in your home needs to be used as your main office space
  2. This space needs to be used exclusively for your business on a regular basis

5. Personal vehicle used for business

A percentage of your car expenses can be claimed as a business expense or as a deduction on your personal taxes, if you use your personal vehicle for business purposes.

These expenses can include insurance, gas, repairs and servicing, parking and toll fees or you can claim based on mileage, tolls and parking. It’s important to keep all proof of expenses that pertain to business travel.

6. The Small Business Health Care Tax Credit

Your business could qualify for tax credits if you provide your employees with healthcare through the Small Business Health Options Program Marketplace. The credit consists of up to 50% of your premium contributions.
These are the qualification criteria:

    • Small business with fewer than 25 employees
  • Average employee salary of less than $50,000
  • Employer pays at least 50% or more of each employee´s premiums

If you struggle with business accounting, as do many business owners, use the services of a certified accountant who is proficient in US taxes.


Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.