Some small business expenses can seem insignificant or inappropriate to include when you're filing taxes. You can't afford not to consider every legal possibility, because taking certain business deductions could make the difference between owing a tax bill and receiving a tax refund. One thing you can do to make sure you don't miss deductible expenses is to highlight them in your accounting software, or you can make a list of expense categories that you plan to itemize on your taxes in a document. Here are four small business expenses to include:
1. Vehicle Expenses
As a work-at-home mom, you may forget to tally all those business related trips you take with your car. It's easy to do because you probably don't use your car often for business use, but you should keep track of your mileage. You can deduct some of those expenses, and the Internal Revenue Service (IRS) also allows a standard deductible amount that you may qualify for.
2. Percent of Rent Payment
You don't have to be a homeowner to deduct a home office deduction. The costs associated with "housing" your home office are valid small business expenses that you should include when filing your taxes. There is a major criteria you have to meet, and that is the office has to be exclusively used for work purposes and not for personal use. Your tax attorney or accountant can help you with the exceptions to that. You'll have to figure out the total square feet of your apartment, and then the square feet of your home office. Divide the latter by the former, and convert that number into a percentage. Multiply your total rent amount by the percent and you'll have the amount to work with for a tax deduction.
3. Shipping Expenses
Keep track of your shipping expenses related to the products you send to customers. Those expenses are related to your cost of goods sold and are generally deductible. For example, if you sell books on Amazon, then you should keep records of the actual costs of each package you ship. Categorize it as one of the small business expenses that you can include the next time you prepare your tax returns.
4. Bank Charges
You should consider finding a bank that offers free business and personal checking accounts and charges a low fee for other services. If your current bank charges you a monthly maintenance fee though, keep records of it for tax deduction purposes. Bank charges are considered small business expenses that you can deduct on your taxes. You may also be able to deduct overdraft fees and other penalties that you were charged by your bank.
Don't miss out on tax savings the next time your file your taxes. You'll need every penny you can save to make a living and grow your business successfully. There are good options for tax software to help you deduct small business expenses if you can't afford to work with a small business tax accountant.
Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.