Applying For A Small Business Tax Deduction – First Steps
Applying For A Small Business Tax Deduction – First Steps
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Those small business owners, who like to save money, would do well to check out the small business tax deduction. This deduction is a way to lower the amount of tax you would have to pay. The way this is possible is through deducting some of the costs of running your small business. As long as these expenses fall in line with the Internal Revenue Service’s Code 162 that states “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business” then you are sure to be able to take advantage of the tax deduction.
A general list of some of these costs includes traveling, entertainment, rentals and allowances for employees. Yet the Internal Revenue Service is a bit more conservative in their allowance of what can be claimed, one important thing to remember is that these costs should not be unreasonably large. This means you should be careful in how much things cost, and make sure the costs match the claim of what you say something costs and never claim personal expenses. Doing either of these things will disqualify you for the tax reduction.
Something else you may want to be careful is not about making any payments to relatives, no matter if it is warranted. It seems that the tax auditors from the Internal Revenue Service can be very picky when it comes to this matter.
There are a few things that can actually qualify you for the business tax reduction. These can include any costs regarding any vehicle. This claim can be figured out one of two ways, either standard mileage which is a formula written by the Internal Revenue Service or by the actual expense. Either way can be used to qualify for the tax deduction you. Besides gas so you can claim any depreciation or maintenance charges as part of the tax reduction.
Something else that can be claimed under the deduction is the cost of entertaining clients. This can only be claimed up to 50 percent but can include things such as tickets for games, concerts, a dinner or even having a barbecue at your house and any related costs. Make sure you keep excellent records rebate though because everything will have to be verified in order to claim the tax.
It is an interesting thing to know that you can then deduct current expenses for the current year as part of your small business tax deduction. These include your everyday costs to keep the business open such as rent, office supplies and electricity.
Now that you are aware of to just what you need to claim these deductions, you have a good place to start from. Make sure you keep very careful records in case of auditing. Other than that if you own your own small business, you are on your way to savings with the tax reduction.
This article was published at Bookkeeping Services of Charlotte, NC Related Business Taxes Articles
