Most Overlooked Tax Deduction by Entrepreneurs | 13 Factors

My Banking Information - Most Overlooked Tax Deduction by Entreprenurs

we have compiled a list of the most Overlooked tax deductions by entrepreneurs which can save business owners and most importantly entrepreneurs thousands of dollars per year. As it is said A penny saved is a penny earned.

Being an entrepreneur is a tough thing nowadays not just because of the sheer amount of increasing wannaprenurs but also because of the low income and margins they are generating hence we have compiled a list of most commonly Overlooked tax deductions by entrepreneurs that can save.

In this blog post, I will explain 11 most Overlooked tax deductions by entrepreneurs.

Most Overlooked Tax Deduction by Entrepreneurs – Step by Step

Marketing and Advertising Budget

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If you are a business owner then you know how much is spent on marketing and advertising budgets in acquiring new customers or qualifying customers and get your word out there, the good news is all of that is tax-deductible i.e. if you are sending out flyers, making ad campaigns on Facebook or Google or Twitter or any other platform like this or you are buying out shelves in the event then all of it is tax-deductible.

Home Office Deduction

If you are working from your home and you have a particular location for your office in your home which you don’t use for anything else then you are eligible for a home office tax deduction and there is a fixed price for this deduction i.e. $5 for every square foot of space used for the business, up to 300 square feet.

Office Supplies

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Office supplies are a good way for a tax deduction because, in an office, many things like stationery are used for business purposes. If you can prove that the things you purchase like a pen, pencil, ruler, or any other kind of stationery are used for business purposes only then you are eligible for a full tax deduction.

But if you use some items like your iPad or a laptop for both Business and Personal uses then you will only be eligible for a tax deduction on the percentage of use you use it for office.

Learning new things

If you are new to the business, then you know that there are a thousand things to learn in a business like marketing, accounting, finance, investing advertising, sometimes graphics as well, etc, etc and if you are learning all those things which are related to primarily your business then the money spent on them will be tax-deductible

Business Travel

It is the most underutilized tax deduction, and that is mileage. If you travel using your car for business purposes, then you are eligible for tax deductions, but going from your home to work is not considered under your mileage tax deduction going for a business meeting from your office to the business meeting place is considered under the mileage

Most Overlooked Tax Deduction by Entrepreneurs

And there are many apps that you can use to track your mileage for business and personal and you can get help in measuring the mileage for your business and avail of the tax benefits.

Business Accommodations

My banking information - Most Overlooked Tax Deduction by Entrepreneurs

If you have to travel a lot for your business, then any expense like hotel expenses, meal expenses, airfare, etc., comes under tax deductions, and you can avail of tax deductions on them easily

Starting up Cost

Even before you go into business, there are many things you need to do to prepare for the competition etc. i.e.

  • Legal and accounting fees
  • Your license, permits, etc.
  • Cost of RND
  • Employee training
  • Your inventory expenses
  • Long-term assets like a computer, equipment, machinery, etc.
  • Cost of making a partnership or liability company etc.

Office Upgrades

Suppose you are considering upgrading your office by buying a new chair office. In that case, you can easily avail yourself of the tax deductions on them and know that two types of tax deductions in it is one time when you purchase the office supply throughout the lifetime of the office supply.

Most Overlooked Tax Deduction by Entrepreneurs

Green Startup

If you are a nature-loving person and the company as well loves to save trees and the environment then you can avail of tax benefits by installing a solar panel in a workplace or purchasing a hybrid Car this year.

Machinery Cost

Some Businesses require heavy machinery and different types of equipment to run it smoothly. If you are one of them, then you can avail of a section 179 deduction, otherwise known as a special depreciation allowance and which has a limit of $500,000.

Learning Cost

If you attended a seminar or a workshop to enhance your skills to run the business, then those come under the tax benefits, and the textbooks you purchase or the donations to business organizations can also be availed under tax deductions.

Some Extra Tax Deductions

  • A state in the United States of America can also have tax deductions, which you can avail
  • Gifts are also tax-deductible then. You can read more about them here
  • If you are planning on a vacation with your family, we loved ones then you should consider combining it with a business trip so that you can avail yourself the percentage of benefits on the business trip
  • You can avail of tax benefits on health insurance if you are a self-employed individual comma less than 25 person the company
  • Having a retirement plan can help you save

Some tips for effective Tax filing

  • Try to keep your Personal and Business expenses on different accounts and credit cards because it may not seem like a big deal to you to pay your employees and buy a fancy necklace for your loved ones using the same bank account or credit card but,
  • it is a big deal for the IRS because they don’t want to make tax deductions on Personal and Business expenses and if you unintentionally or intentionally try to trick the IRS it can result in penalties or audits which can bring hidden things to the surface.
  • If you need some extra time for filing your taxes, then you can use extension form 7004.
  • If you are in a business, then it sometimes becomes overwhelming for everyone but you have to keep it clean so that you don’t have to face the last-minute burden of managing something by which what we mean is if you keep a record of all the expenses which are done by your business then you can easily file the taxes and will not have to face the last minute burden of finding receipts, fortunately, there are many apps which can help you manage your expenses and keep a record of them like expensive, shoeboxes, etc.
  • Not only do you have to track and manage all the expenses for the business you should also keep a record of all the documents filed and expenses for at least 7 years because the IRS or any other government agency can ask you for those documents if you undergo a penalty later
  • If you Hire any freelancers, attorneys, or contractors throughout the year and paid them an amount greater than $600, then you are obligated to issue 1099 MISC forms to both the individual and the IRS
  • Make sure when you send your forms to IRS where properly signed and sealed and documented if they are not there considered invalid, and you have to refile it.

Conclusion

I hope I can save you thousands of dollars in taxes, and if you have a tip that we have mentioned here, please share the tip to help the startup community because every penny saved is a penny earned.