UNITED STATES—November 11, 2019—As the end of the year approaches, it’s time to start thinking about your taxes for 2019. Owning a business only makes your taxes that much more complicated, but there are many opportunities for business owners to save on taxes—if you know what deductions to take. There are many tax deductions that you might not even realize are available to you, and this could represent a significant savings. We’ve got your back though with a rundown of “The Most Forgotten Tax Deductions Business Owners Should Take” by Mark J. Kohler, published by Entrepreneur.
Equipment and supplies
Kohler, a Certified Public Accountant, has compiled a list of some of the easiest and most often overlooked tax deductions for business owners, and he has some tips for how to get the most out of them. First up, he reminds owners to deduct all technology, electronic equipment, and supplies that serve a business purpose. If you purchased new phones, computers, iPads, cameras, or any other equipment for your business, you can write off those expenses. Anything that is part of the normal operating expenses of your business, right down to printer paper and ink cartridges, is deductible if it is 100% for business use. If you purchase something that is part business use and part personal, you can still deduct the percentage of the expense that you use for business, according to Kohler.
Phone and internet
In addition to technology equipment, you can deduct your phone and internet service fees. These are necessary business expenses. Again, if you use the same service for business and personal, you’ll need to deduct only the percentage it’s used for business, but dedicated phone and internet service to your office is 100% deductible. Additionally, Kohler notes that if you have at least one dedicated home phone line, you can write off 100% of your mobile phone service.
Food and dining
Food and dining expenses you incur in the course of doing business can also be deducted, and chances are you spend a lot of money in this category during the year. According to Kohler, the new tax code limits most dining expenses to 50% deductible, but this likely still represents a significant savings on your taxes, so be sure to document all meals and food expenses. These include any business dinners or meals spent discussing your business, meals you eat while traveling for business, and food you provide for your employees in the workplace, such as bagels for breakfast or pizza for lunch. If you stock coffee or snacks in the breakroom, that’s deductible too. Kohler points out that a few food expenses are still 100% deductible, and these include food provided for a special client event or presentation or food provided for a special employee event, like a holiday party, special training, or a team-building event. Be sure to track these special events separately to receive the full 100% deduction.
Finally, business travel expenses, including airfare, hotel, rental car, parking, transportation, etc., are also 100% deductible. Did you attend a conference or training class or pay for your employees to attend? Did you travel to meet with vendors, clients, or franchisees? Are you attending ISSA Show North America this month? Keep track of all travel-related expenses to deduct on your taxes. Kohler also has some tips for making other kinds of travel at least partially deductible by conducting business on personal trips. For example, if you meet with a client or vendor every time you travel, the portion of your trip spent on business becomes deductible. You could also attend a conference or training event or host your annual board of directors or member meeting as part of your travel. Kohler warns that combining too much pleasure and business travel can raise red flags, but as long as you do at least four or more hours of work, you can deduct expenses for your travel days and the day(s) you spend doing at least four hours of work.
As with all tax deductions, documentation is key. Be sure to scan or save your receipts and track all of these expenses in some kind of spreadsheet to make things easier on yourself at tax time. Tax deductions can be tricky, so it’s also a good idea to consult a professional to ensure proper filing.