Business Tax Deductions You Don’t Want to Miss This Year
Posted by Megan Webb-Morgan on December 6, 2012 in Business Financing [ 0 Comments ]
No matter what stage of life your business is in, there are tax deductions out there designed to help your business thrive. Whether you’re just starting out with a home-based business, looking into building a new space, or recovering from a natural disaster, there’s a tax deduction you can use to save money on operational costs and unexpected events this year.
You can claim a tax deduction if you use your home office – or a separate structure on your property – as your principle place of business. You must utilize this area “exclusively and regularly” to conduct business; an office set up in a spare room counts, but the kitchen table does not.
- The expenses you can deduct for your home-based business include: rent, mortgage interest, real estate taxes, utilities, insurance, repairs, and depreciation of your home.
New Business Startup Costs
If you spend money to start your new business – on things like supplies, equipment, or employee training – before your business is fully operational, you can deduct those expenses once you open your doors.
- These deductible costs include the expenses associated with “investigating the creation or acquisition of an active trade or business” and getting your business ready to open.
- You cannot deduct expenses incurred after you open.
Energy Efficient Offices
Building or remodeling a commercial building to save energy when heating, cooling, and using electricity can come with significant tax benefits (as well as benefits for employee health and the environment). State and local incentives and deductions are available for LEED-certified buildings and new construction.
- By meeting ASHRAE Standard 90.1-2001, your business can take deductions for saving 50% of the heating and cooling energy of a building. This standard also provides incentives and deductions for weatherproofing, energy-efficient lighting, and other measures.
If you purchase qualifying equipment, software, or vehicles during the tax year, you can write off the full purchase price on that year’s taxes through Section 179 of the IRS tax code. Section 179 was created to encourage small businesses to buy equipment and motivate the economy by giving them an immediate tax deduction. Use this quick, it will be unavailable as of Dec. 31 2012!
- This deduction was written specifically for small and medium-sized businesses. You can write off any qualifying equipment that you purchase, finance, or lease for up to $560,000.
- Both new and used equipment applies to this deduction. So long as the equipment is “new to you,” you can use Section 179.
The Affordable Care Act provides tax credits for small businesses that provide health insurance coverage to their employees, as well as credits for self-employed individuals and their families. The purpose of this credit is to encourage small businesses to purchase insurance for themselves and their employees and to help businesses shoulder the costs of employee premiums.
- · From 2010 to 2013, small businesses can deduct up to 35% of employee premium costs. In 2014, the maximum credit will increase to 50%.
In 2010, fires damaged 98,000 commercial buildings, causing $2.6 billion in property damage. The damage to businesses from Hurricane Sandy in 2012 is inestimable, not only in regards to property damage, but for lost business, lost wages, and lost inventory as well.
- If your insurance does not cover damage incurred by events such as fires, tornados, power outages, and storms, you can take a tax deduction against your business income for the value of the lost property.
There are many business tax deductions available for your company. Keep good records of your startup costs, business-related purchases, and efforts on behalf of employees, and use them to write off any number of expenses come tax season.
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