Small Business Tax Deductions & Recordkeeping

We receive a lot of questions at this time of year about business deductions.  There are many expenses that business owners can deduct to reduce the amount of profit that that will be taxed.  But, for most of these business deductions, there are rules about recordkeeping that the IRS expects you to follow or the deduction may not be accepted.

Here is a short segment on McRuer Money Minutes explaining “Why Recordkeeping Matters”.

There are several common business deductions which have various recordkeeping requirements:

• Auto Expenses
• Expenses of Going Into Business
• Books and Legal and Professional Fees
• Bad Debts for Goods Sold
• Business Entertaining
• Travel Expenses
• Interest on Credit
• New Equipment
• Moving Expenses
• Charitable Contributions
• Some Taxes
• Education Expenses
• Advertising and Promotions

Many small business owners don’t realize they can deduct the cost of learning more about how to be successful.  With receipts and a true business connection, some of those allowable deductions include:

• audiotapes and videotapes related to business skills
• business-related publications like magazines and books
• seminars and trade shows
• business association dues

Here are some business deductions that are easy to keep records of, but are often overlooked by business owners:

• bank service charges and credit bureau fees
• casualty and theft losses
• on-site coffee and beverage service
• consultant fees
• office supplies
• online computer services related to business
• petty cash funds
• postage
• taxi and bus fare for business purposes
• parking and meter fees

Business owners who properly track all of their expenses year round end up saving more on their tax bill.  That’s because they not only remember to list all their deductions, but they also have the documentation to prove their claims.