Special-Needs-Tax-DeductionsThe more you deduct, the more money that stays in your business (or pocket). Not everything for your business is deductible. Here are a few common, yet under utilized business deductions that you can take advantage of!

1. Rent

You can deduct 100% of your rent for your office space.

The catch is that somebody else has to own it. For example, if you have a new business and you’re paying $500 a month for office space, you can deduct it from your taxable income to save on your tax bill.

You can report your rent on Schedule C or the Profit or Loss from Business form. People who work from their homes can deduct mortgage or rent based on the percentage of space used exclusively for their business. For example, if your home office takes of up 20% of your total square footage, 20% of your rent/mortgage is deductible.

Note: If the IRS comes to check out that home office, make sure you are not sending any conflicting messages on what it is being used for. For example, TVs, couches and cooking equipment, are great ways to prove that you are not only using that space for working! To use IRS terminology, the space must be for “regular and exclusive use” and  “be the principle place of business.”

Read more on rent deductions HYPERLINK “http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction”here.

 2. Office Equipment

What you need to run your business can also save you money.

You can get a 100% deduction on furniture, computers, printers, fax machines, and other office supplies (pens, paper, etc). Some commonly overlooked deductions are business related books, audiobooks and videos. Topics include, but are certainly not limited to, sales strategy, tax, and legal literature.

3. Advertising

Mad Men isn’t the only reason we love advertising.

Any advertising in magazines, newspapers, or promotions done through the internet can be written off your taxes. Direct mail is an advertising expense, and you might want to report your printing and postage expenses under Schedule C on your tax form.

4. Professional Services 

Fees for Lawyers, Tax/accounting service and consultants can all be deducted within the year they incurred. The catch is if the value of service clearly extends outside of that year, it must be deducted over the lifetime of the benefit.

5. What is not Deductible!

Yes, these have been attempted before:

Hair transplants/hair cuts: looking good is not a business expense- consider a toupee. (cheaper, but still not deductible.)

Covering up affairs. Girlfriends on the side can be expensive, but using your business to cover it up won’t fly!

Getting Stiffed: If you provide a service, and your client does not pay the bill, no deduction. This is different if you sell a physical good, where you can then deduct your COGS.

About Author Matt Faustman


Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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