Learning Center

04 JAN

Four Commonly Overlooked Tax Breaks for Business Owners

Is there a business owner in the world who would pass up an opportunity to save money and make things run more smoothly? Probably not, especially in this day and age. Maximizing profits, minimizing losses, and eliminating wasteful spending has never been more important for American business owners.

Why is it, then, that tax professionals are often able to uncover significant legal tax breaks for businesses? Probably because most business owners don’t have time to study the applicable federal and state tax code, much less come up with ways to leverage it. There are too many other things to worry about. Running a business is a complicated affair. Taxes are often more of an afterthought than a real attempt to improve the company’s financial standing.

If the average business owners only knew about the overlooked tax breaks listed below, they’d probably see taxes differently. With the proper knowledge and mindset, it’s literally possible to save your company tens of thousands of dollars in ways that are completely legal and acceptable to the tax authorities.

1. The cost of starting up

Don’t think you’re all alone when it comes time to invest in a new business. The IRS recognizes the importance of new business ventures and offers significant tax deductions on money that was used to start a business (before it actually started doing business in the market).

2. The goods you haven’t sold yet

Inventory can be a tricky and confusing part of tax preparation for businesses. It’s often assumed that inventory is not tax deductible, but as it turns out, there are situations in which inventory can be deducted. This is possible due to specific tax laws that apply to certain businesses—namely those who are service-based but also sell products (e.g. a spa that also sells hair products).

3. Supplies and furniture

Most businesses don’t take full advantage of tax write-offs for business supplies, including furniture. In most cases, it comes down to documentation and presence of mind. Hang onto those receipts and keep track of those business expenses. Tax authorities make clear what qualifies as a deduction and what doesn’t—but many businesses don’t take all the deductions they legally could.

4. Home office deductions

Many small business owners dedicate a small part of their home to conducting businesses. Even if it’s only a fraction of a room, this can be a valuable deduction when it comes time to file taxes. Just make sure you play by the rules and understand what kind of the proof the IRS is looking for. Playing “fast and loose” with the home office deduction may attract unwanted attention.

Making the most of tax laws to help your business

The tax breaks listed here are some of the most commonly overlooked—but the reality is, there are many more. That’s why so many businesses put their taxes in the hands of professionals who know exactly what to look for. Growing and competing in the 21st century marketplace is already a challenge. Making the most of the various tax laws, and the benefits they offer to businesses, is not something the average business owners or manager has time for. That’s where a qualified tax specialist can make a world of difference—but the importance of working with someone reputable cannot be overstated.