Tax Deductions for Business Owners
Thursday, February 11, 2010 | Written by Jim Beach
Posted under: Financial Concerns |
Tags: business deductions, business taxes, taxes and deductions |
1 Comment
We have always advised using a LLC as your legal entity for business. If you do, all your business incomes and expenses will appear on the Schedule C of
your personal taxes. All the expenses therefore reduce your taxable income. For example, let’s say you make $50k at a job and $25k on your business, for a total income of $75k. Assuming you have a home business, lots of normal expenses become partial business expenses, or business deductions. Your new computer, half your business dinners, your business travel, your business cell, etc. become deductions. In our example, you may very well have $30k in deductions, meaning you only pay taxes on $45k. The question, then, is: what is deductible? I made a list of deductible expenses, see below. There are some caveats. COmputer and internet programming costs are usually deducted in one year even though you may use them for 2-3 years, IF they are under $250k. Gifts to business friends are allowed but only for under $30 a person…..
| Accounting fees | FULLY | |
| Advertising | FULLY | |
| Auto | Split business(yes) & personal (not) | |
| Bank charges | FULLY | |
| Bribes | Not | |
| Cell Phone | MOSTLY | |
| Commissions and sales expenses | FULLY | |
| Computers | FULLY | |
| Consultation expenses | FULLY | |
| Continuing professional education | FULLY | |
| Contract labor | FULLY | |
| Contributions | Not | |
| Credit and collection fees | FULLY | |
| Delivery charges | FULLY | |
| Dues and subscriptions | FULLY | |
| Employee benefit programs | FULLY | |
| Entertainment | 50% Deductible | |
| Equipment rentals | FULLY | |
| Factory expenses | FULLY | |
| Gifts | $25 per person | |
| Home Office | Split business(yes) & personal (not) | |
| Insurance | FULLY | |
| Interest paid | FULLY | |
| Internet subs, domain names, and hosting | FULLY | |
| Laundry | FULLY | |
| Legal fees | FULLY | |
| Licenses | FULLY | |
| Lobbying | Not | |
| Maintenance and repairs | FULLY | |
| Meals | 50% Deductible | |
| Office expenses and supplies | FULLY | |
| Penalties | Not | |
| Pension and profit-sharing plans | FULLY | |
| Postage | FULLY | |
| Print and copy | FULLY | |
| Professional development and training | FULLY | |
| Professional fees | FULLY | |
| Promotion | FULLY | |
| Rent | FULLY | |
| Salaries, wages, and other compensation | FULLY | |
| Security | FULLY | |
| Small tools and equipment | FULLY | |
| Social Clubs | Not | |
| Software | FULLY | |
| Supplies | FULLY | |
| Taxes | FULLY | |
| Telephone | FULLY | |
| Trade discounts | FULLY | |
| Travel | FULLY | |
| Utilities | FULLY | |
Related posts:
- More Small Business Taxes
- Free office space for your business… in Japan!
- Obama Small Business Tax Cuts?
- Cheap Atlanta Office Space
- Bootstrapping a Start-up Business
Posted under: Financial Concerns | Tags: business deductions, business taxes, taxes and deductions | 1 Comment
1 Comment
Leave a Reply
Recent Media Coverage
Follow Us
[...] School is a big fan of using LLC’s as the legal entity of choice for your business. Read Professor Jim’s previous blog on the [...]