Are you in business for yourself? If so, you're on the right track. Owning your own business is the first step toward financial freedom. Be sure to use that to your benefit and stop overpaying your taxes! Tax write offs are not only used by huge corporations. Even if you run a small business from your home, you are eligible for a wide range of tax deductions that can help you drastically reduce what you end up paying the IRS every year. Below you will find just a few of the deductions you may be able to take.
Do you have a home office? If so, be sure you are using it as a tax deduction. Any area in your home that is used exclusively for business use may qualify you for a little bit of tax relief. This space must meet the following three conditions before it will qualify for a tax write off.
If you qualify, you can deduct part of your rent or mortgage interest, electricity and other utilities, homeowners insurance and cleaning bills. The size of the deduction is based on the percentage of your home that you use for business. If you are renting your home, you can deduct the portion of your rent equal to the size of the space used to operate your business.
Meeting with clients and making potential clients is an important part of being in business. If you are doing a lot of driving in the course of these meetings, the following related expenses are deductible:
Flying to your destination? You can also deduct the cost of your tickets. Many of the other expenses related to business travel are deductible, including: hotel, food, taxi fares, phone calls, and dry cleaning. Did you have to ship equipment to this meeting? Those expenses are deductible as well.
There are many types of insurance premiums related to the running of your business, and most of these are tax deductible. Do you pay for any of the following forms of insurance? If so, be sure you are claiming them as a tax deduction.
You may not be ready to retire right now, but you should definitely planning for it. There is also a tax incentive to retirement planning if you make contributions to certain pension plans. Eligible plans include:
You may also be able to qualify for a 50% tax credit on the first $1,000 of the costs you incur to start up one of these plans.
This is just a brief introduction to the tax write offs that are available to those who own their own business. Being self employed can be difficult enough without overpaying your taxes. Make sure you are taking the fullest extent of deductions available to you. To find out more about tax deductions you can use for your small business, sign up below for a complementary strategy session with a trained tax professional.
To learn more tax saving strategies, please see our Tax Write Offs page.