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Top 10 Tax Write-Offs for Small Business Owners

Top 10 Tax Write-Offs for Small Business Owners

As a small business owner, tax season can be a stressful time. With all of those forms to mail to employees, expenses to track, and checks to write to the IRS, no-one could blame you for dreading the month of April. But beneath the bureaucratic onslaught, there is one shining beacon of hope: deductions, deductions, deductions. For the small business owner, deductions are a world of plenty.

Like everything to do with the IRS, the rules around deductions can be nuanced, so it’s important to do your research, talk with an accountant, and use a good tax calendar to stay on track of regulations and deadlines. Advises Austin-based Certified Public Accountant, David Coffman, “Make sure to keep good detailed records supporting your deductions for at least 6 years, and fill out the proper forms correctly and completely.”

Here are just a few deductions you won’t want to miss:

1. Travel Expenses

Rest assured that when you stay overnight at a hotel while conducting business away from home, that night will be fully tax-deductible. In fact, every night you spend away for business purposes will also be deductible, as will 50% of any meals you eat out (with or without a client in tow), any rental cars and plane tickets, and sometimes even transcription or translation services while traveling abroad.

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Thinking of extending your stay for a little vacation time? As long as the purpose of your trip is mainly for business, you can still deduct your travel costs to and from the destination. “However,” Coffman cautions, “expenses specific to the personal portion are not deductible.”

No matter what, just make sure to keep good track of your receipts regardless of the total (yes, even if it’s below $75).

2. Auto Expenses

Do you use your car for business? Do you own a company car? Some of the costs associated with gassing up and maintaining that car will be deductible. For 2012, you’ll be able to deduct 55.5 cents per each mile driven, as well as all business-related tolls and parking fees. Don’t just eyeball this, especially if you only own one car—it’s a red flag for IRS eyes. Keep track of the exact miles you drive, enter them into your accounting system or hand them to your bookkeeper, and include a detailed description for each recording.

3. Current and Capitalized Expenses

It’s easy to confuse current and capital expenses, so it’s worth defining them separately. Current expenses are things like rent and electricity bills—those ongoing costs that keep both your office and your business up and running. Capitalized expenses, on the other hand, are expenditures like equipment and vehicles. Current expenses are simply deducted from your business’ yearly gross income, while capitalized expenses must be deducted over a number of years. A general rule of thumb is this: if an item has a shelf life of longer than one year, it’s capitalized. That being said, many items such as office supplies and repairs can be deducted as current business expenses, but only after your business has opened its doors. Before that, they’ll be capitalized. Confusing? Maybe, but understanding these distinctions and filing accordingly will be well worth the effort in the end.

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4. Software and Subscriptions

Once upon a time, businesses looking for deductions in the area of software and subscriptions had to depreciate the cost of computer software over three years; see current vs. capitalized expenses. Now, however, computer and software expenses can be cited as expenses up front using the Section 179 election, just like magazine subscriptions.

5. Health Care Costs

Though exact amounts and procedures will differ based on the type of business filing you have, many health care costs are deductible for small business owners. For proprietorships, health insurance premiums are 100 percent deductible on Form 1040 as an adjustment to income, though that deduction can’t be more than your business’ net profit, and the deduction is void if you’re eligible for any other kind of health coverage—including those of your employed spouse. However, if your spouse worked for your business, then his or her premiums are also fully deductible.

Things will be a little different if you’re filed as a C-Corporation. In this case: “Health care costs, including out of pocket expenses, are deductible as a business expense under a health reimbursement arrangement,” says Coffman. You’ll want to contact accountant to get this set up at least in your initial year as a C-Corporation.

6. Bad Debts

It’s never any fun when a client doesn’t pay or a vendor doesn’t deliver, but if you’ve got a bad debt on your rolls, it may be deductible, but only for accrual basis rather than cash basis taxpayers (learn the difference here). Says Coffman, “If an accrual basis taxpayer has billed for his goods and services, he may write off as a bad debt any amounts not collected. A cash basis taxpayer may not write off uncollected fees for services or goods, but may write off the cost of the goods that were not paid for.”

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Unfortunately, this applies only to goods, not to services, which are a lot more difficult to quantify. Alas, you truly cannot recover lost time.

7. Home Office Deductions

Home office deductions are popular among small business people. If you work from home, you can deduct for depreciation, utilities, insurance premiums, mortgage interest and repairs. However, the deduction counts only for that space, and you must use the area regularly and exclusively for business. If you think this is a good excuse to get a break for all of that yard landscaping you’ve been paying for, think again: the rules around this deduction are strict, and it is often a trigger for audits, so learn them well before filing incorrectly.

8. Business and Professional Fees

If you’ve bought business books, paid any fees to lawyers, tax professionals and more, and their service is clearly related to this year’s activities, these all qualify as deductions. However, if these fees relate to future years, they’ll need to be deducted over the life of the benefit they provide.

9. Retirement Contributions

If you’re self-employed and contribute to a SEP-IRA or Keogh, these can all be deducted on your personal income tax return.

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Adds Coffman, “This is one of the few areas where you can claim a deduction in the current year for amounts paid in a later year. You get to see the effect of the deduction before you actually commit to it. Some plans, however, must at least be established prior to the end of the year.”

10. Phone Calls

Business-related phone calls are fully deductible, even if you conduct them on your personal cell phone or home phone. As with mileage, you just have to keep good records that separate the business calls from the personal ones. A good way to do this is to circle business calls and write a description on your bills, total them up and keep a copy to be added into your final returns. If you add a second line or buy a cell phone that’s dedicated primarily to business, you’ll be able to fully deduct any regular fees and charges associated with the line.

Take-Away

When tax season comes around, there’s a lot for small business owners to think about, and just as many deductions to benefit from as well. Do your research, keep abreast of the latest regulations, and contact a good accountant early in the year to get it done right. Don’t wait until the last minute, or you may miss out!

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Last Updated on August 16, 2019

15 Smart Ways to Approach Interpersonal Relationships at Work

15 Smart Ways to Approach Interpersonal Relationships at Work

Once you have embarked on your professional life, whether it is after college or high school, you will be making a transition to the workplace. If possible, it is good to find an employer that is flexible. In other words, one that possesses a culture that is diverse and tailors to the needs of its employees as a bottom line.

But, even if you don’t land your dream job right away, there are many ways to improve your experiences within the workplace as you climb the career ladder.

In the subsequent sections will be looking over ways to engage your relationships at work, including 15 ways to effectively approach interpersonal relationships at the workplace.

1. Open Up Cautiously

Depending on if its a startup, a small business, enterprise or corporation it’s important to be aware of your surroundings.

Be mindful of how much you open up about yourself, specifically regarding your personal life. You do not want to give the wrong impression, so be careful how much or what details you divulge about being in a relationship or having children.

You have to reach a certain comfort level and rapport with the rest of the staff to be able to engage in transparent conversations. A good general guideline is to stick to small talk.

2. Observe Your Surroundings

There will be times when we are summoned to have a leadership role or to undertake a project to lead a team.

Try not to be too bold or overcompensate at every turn when there is a meeting or an interaction among other staff or employees. The last thing you want to do is to be the person who wants to monopolize every conversation and every interaction.

Be a passive observer at first, and more often than not, you will learn a lot by letting others talk a lot about themselves.

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3. Listen Actively

It may seem redundant, but it is essential to practice the art of really listening to the other person.

Developing interpersonal skills and connections with others at work comes down to listening. It is not just paraphrasing what your superiors or colleagues are trying to communicate; it is about understanding what is at the core and reading between the lines.

Phrases like “I can see what you are saying” or “I can acknowledge your insight” are just some examples. Learn to empathize and relate with people with whom you have a genuine connection.

4. Consolidate All Feedback

When you learn to listen to others and to allow them to finish their thoughts you are on your way to be being a great communicator.

One of the toughest tasks to accomplish is to include everyone’s voice. Don’t rely on shout-outs or trying to come up with the best answer. Including everyone’s voice is about listening to all suggestions and putting together an entire picture. When everyone feels part of the process there is great cohesion.

5. Never Make Sweeping Judgements

As person and a human being with compassion never make any assumptions about anyone.

Just because they have a certain skin color, clothes or physical features, never make stereotypical or generalizations about anyone.

6. Keep Emotions in Check

Work-related stress is something we all have to deal with at some point or another. Whether you work in the public or private sector you will encounter stressors or stressful co-workers. In this case, it is good to keep open the lines of communications.

Always ask to clarify how a person feels and where they are coming from. It is better to entertain these conversations before they make a person lash out or have a negative reaction. Ask to speak privately and get feedback. When you do this it really shows you care about what your role is and that you are a true professional.

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7. Give Help to Others

Having compassion and empathy for others is a noble attitude to practice.

Though, do be careful about how much you want to get involved with colleagues at the office; it could jeopardize the nature of your work relationship and the roles you both have.

It’s best to separate the personal from the professional and lend a hand by using your best judgement.

8. Broaden Your Horizons

Once you have worked in a company or an organization, things can get repetitive and dull. Sometimes we need to remember that we are human and need to fulfill certain responsibilities.

Often we want to try to change things by introducing our best abilities or perhaps our inventions, but we need to be realistic. Change does not happen overnight, rather it is a long process.

Step back and take a look at the big picture, and, put all your cards on the table to get perspective. Sometimes we approach situations in life from the wrong point-of-view.

9. Be Optimistic

This is probably one you have heard time and time again.

When we suggest to have a positive attitude it does not mean to fake it until you make it, nor to conceal your feelings. This is not the case in this situation. Overall, you want to try to be authentic in how you are feeling, because life will throw curve balls that are beyond our control.

10. Be Sensitive to Cultural Norms

Whenever you are around other people within a professional workspace, do not make assumptions in trying to figure people out in an instant.

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Some cultures discourage physical contact, while others may be inviting. Always be courteous, respectful and ask questions. It will not only make you more aware of others’ needs, but show that you are considerate of the differences.

You do not want to get off on the wrong foot by being too friendly or too touchy. Just observe how people respond to your approach and let them lead the way of what is a safe practice to meet and greet the first time around.

11. Show Professionalism

How you interact and carry yourself around others will be the difference between a job promotion or losing your job. No matter what, always respectful and professional towards others.

You will have an opportunities in life and at work, so showcase an outpouring of great and positive energy in the face of adversity.

12. Get Involved with Activities

When you are part of a company, there are often opportunities for organized activities outside of the office space.

Sometimes it is worth exploring uncharted terrain and to get to know people in a different environment. Plus, you will have an opportunity to be seeing in a different light.

Even though you are off the clock, keep your professional tenure and set boundaries. You want to be vulnerable, but not put yourself in a comprising position. Use your intuition and common sense to evaluate these situations.

13. Get to Know Your Company

With your smartphone or your laptop, you have at your fingertips a mine of information online. Just as you would do before a job interview, conduct ample research to get familiarized with what your company does and how its branding is perceived via the media or social networks.

Rather than just focusing on doing your job and fulfilling the duties, see what the business is up to. It is fundamental to really know what organization you belong to. Get educated on what other ventures they are involved with as well as the ones that you are directly in the know about.

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14. Learn to Problem Solve

Problem solving is going to be a skill you will acquire with experience and by making mistakes. Furthermore, not only will you make mistakes but you will likely also sometimes fail. This is okay and is part of the natural swing of things!

Learn to take responsibility for your actions and decisions. At the same time, do not blame others for coming up short. When you come forward with the truth and responsibility, your supervisors or superiors will take notice of your authenticity.

One of the greatest gifts in life is fail and once you experience you start to get a different perspective on how to move forward at the job.

15. Do Some Prospecting

If you have coding, computer, language or other beneficial skills, be sure to pitch these at the right time.

When you start out new at a company it is best not to show all your cards. It is like poker: don’t let others see if you believe you have the upper hand. Take time to get familiarized with your company and organization before promoting your outside skillset.

You will know when to put forward your amazing talents, so proceed with caution.

Conclusion

Learning to refine your interpersonal skills is a lifelong process. In time, you will also became more effective and skillful after accumulating work-related experiences.

Exert humility, understanding, compassion, and mindfulness and the rewards will come!

Featured photo credit: Brooke Cagle via unsplash.com

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