The tax laws that businesses are subject to tend to change from time to time. So it’s important for small business owners, in particular, to be aware of all the tax laws that are applicable in their state.

One of these changing factors is the tax deductions that your business qualifies for. Separate laws apply for tax deductions apply for both startups and small businesses.

In this blog, we’ll be covering every aspect of this topic.

Tax deductions for small businesses that get overlooked

What are tax deductions?

Tax deductions are incentives given by the government. If a particular business expense falls under the predefined frame, you’re eligible for a tax deduction. In a nutshell, tax deductions are a reduction in your business’s tax liability. The more tax deductions you are eligible for, the lower the amount of tax that you’ll need to pay. Tax deductions can also help you move to a lower tax bracket.

Small business tax deductions  

Many small business owners are oblivious to tax deductions and, as a result, end up missing out on saving cash. And since money is generally a problem for small business, they lose out on vital funds.

Personal vehicles used for business purposes

Most business owners don’t know about this tax rule. If any business owner is using their personal vehicle for business purposes, they are eligible to claim a tax deduction. Business owners are already being taxed on their personal vehicles, and thus, are exempt from paying the same tax twice.

To calculate this deduction, business owners can easily deduct their travel expenses like the cost of gas. The Internal Revenue Service (IRS) rate for business mileage can also be used to calculate the deduction.

Business travel

Business travel in a small business is a tax deductible item too. Practical business travel costs like airfare and hotel costs are eligible for deductions, as well as 50% of business entertainment. Business entertainment includes taking clients out to dinner or the costs incurred for an important meeting out of town.

Tax deduction for a start-up

A major proportion of the start-up costs of a business can be claimed for a tax deduction. Up to $5000 of start-up costs and the same for organizational costs can be included as a tax deduction. This is done to incentivize new businesses to enter the market.

You can get this and much more vital information for your small business at A&B Accounting and Business Solutions, LLC. We provide tax services to clients in Palm Beach. We also specialize in other accounting services like bookkeeping services, part-time controller services, payroll services, and much more! Contact 1(954) 596-9966 for more information.