Blog

5 Small-Business Tax Deductions You Didn’t Know You Could Take

You only know the date of one life’s two certainties: April 15.

So be ready.

Most people mark Tax Day with nothing but dread, or try to ignore completely. Small-business owners can’t afford to ignore it, though. It can only be made worse by not taking every reduction possible.

As outline in my book Live Free or DIY and elsewhere, small-business owners must make the most of every cent unless they have deep pockets backing them — and few do. About 95 percent of small businesses are self-funded or have help from family and friends.

Small things add up for small businesses. Make the most of all the government wants you to have.

 

1) Nearly double your vehicle deduction thanks to your home office

According to Tom Wheelwright, author of “Tax-Free Wealth,” a home office increases possible deductions on a vehicle because commutes aren’t deductible.

“If your first stop is your home office, you may be able to eliminate the nondeductible ‘commute,’ according to IRS rules,” he said. “Your first drive of the day and the last drive home is called a commute, and that’s not deductible. So if you have a home office, your first ‘commute’ is 30 feet. But your next commute — say, to a client’s home — is what’s deductible. Some people almost double their automobile deduction by having a home office.”

 

2) Use freelancers? Here’s a way to save big.

“There is a new amnesty program for employers who have been treating their employees as 1099 freelancers instead of W-2s. It’s a good deal,” said Eva Rosenberg, author of several books and ebooks, including Small Business Taxes Made Easy and the new Deduct Everything! “The IRS has many ways to catch and penalize employers who are not putting workers on the payroll. With the deal, the IRS will only charge 1/10th of the taxes for one year. Period. No interest, no penalties, no audit.”

 

3) Bad debts made not quite so bad

According to Barbara Weltman, president and founder of Big Ideas for Small Business, Inc.: “If you lent money to an employee, a vendor or someone else and haven’t yet been repaid, you may be able to deduct the loss. How you treat the loan depends on whether the debt is a bad business debt or a bad nonbusiness debt.”

 

4) Jobs for veterans

The government provides incentives for hiring people who served in the military. According to Fundivo: “If you are able to hire a veteran that has been unemployed for over 4 weeks, you will be qualified for tax deductions. If the veteran has been unemployed for at least six months, you will be qualified for up to 40% of the first $14,000 of wages (up to $5,600).”

 

5) Deduct landscaping thanks, again, to that home office

“Small business owners with a home office may be able to write off certain cosmetic improvements such as landscaping, lawn care and driveway repairs,” wrote Jonnelle Marte, a reporter covering personal finance for the Washington Post. “One self-employed man who met most of his clients at home had success writing off part of his landscaping costs in 2001, leading to deduction of more than $11,000, when he showed that the section of his property receiving the improvements was used primarily for business.”