Three (3) Tax-Tips for the Small Business Owner

As a small business owner, it can be difficult to navigate the terrain of an IRS audit or exam…or even think about the possibility of dealing with one!

While you should have a tax professional helping you out each tax season, it’s always helpful to have basic knowledge of your own. That way, you can have an idea of what is and what isn’t considered a business expense according to the IRS.

To make it easier for you, here are some quick tips on tax deductions for small businesses:

Tax-Tip #1: Home Office

Having a home office is not immediate grounds for an audit, so don’t let fears of the auditor dissuade you from claiming your home workspace. However, here are some things to consider before claiming your home office:

·      Make sure your office is distinctly separate from the rest of your living space – meaning, your home office can’t double as a playroom or guestroom or anything other than an office.

·      It will be hard to claim your computer if it’s the only one you own; no auditor will believe you don’t use it for personal reasons as well.

·      To figure out the percentage of your home expenses that are deductible for your business, measure the square footage of your office space and divide that by the square footage of your entire home. That percentage is the portion of rent, mortgage, taxes, utility bills and maintenance expenses that you can claim.

Tax-Tip #2: Technology Purchases

Uncle Sam is kind to new businesses when it comes to technology. Computers, printers and even company vehicles are tax-deductible. Sometimes, you can even claim the entire cost of the purchase. You can distribute the amount over a period of years, or claim it all on one return. That being said, don’t be afraid to invest in the technology you need, because you will need it.

Tax-Tip #3: Travel Costs

Oftentimes, travel is necessary for small business growth and expansion. That being said, many business travel expenses are completely tax-deductible. Our tip on travel expenses? Write off airfare, hotels, car rental, mileage and even laundry costs. While food is deductible up to 50%, don’t over do it, because the government figures that you have to eat—traveling or not—and they won’t let you write off the entire expense.

·      If you take your family with you, only YOUR expenses are deductible.

·      If you take clients out for a meal, those costs are 50% deductible as well.

·      Conference fees are 100% deductible, as long as the conference is related to your business.

·      Entertainment costs are not deductible whatsoever.

While all of these tips should help to prepare you for tax season, the best advice we can give you is to always keep accurate records of your purchases and to have a professional help you out when it comes time to file your tax return.

With a professional on your side, your taxes will be in order, the IRS will leave you alone, and you might even find some savings you wouldn’t have found otherwise!

Contact us at and schedule a consultation to discuss how we can help you prepare your small business tax returns this coming tax season.


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