Accountants and other fiscal experts often emphasize how smart daily accounting makes for less hassle come tax time. With a little tax savvy, you could have an easier time filing for your business and likely pay less to the IRS. One trick is knowing exactly what you can and cannot deduct. With that in mind, here are seven tax write-offs small business owners commonly miss when filing:
1. Meals and entertainment
Everyone knows meals and entertainment are deductible when you are finalizing terms with a client over dinner. However, you can extend those boundaries to include business-related conversations, networking events that resulted in a lead, or any other dining and entertaining. Just be sure to keep receipts with notes about who you were with and the results of every just in case you’re audited.
2. Bank fees
With bank's fee schedules changing every six months, it’s nearly impossible to remember the terms of every account and when each payment is due. The good news is that bank fees for your business accounts may be deductible. For example, if you need cash to pay a delivery person and have to use the ATM next door, the $3.00 fee, in addition to the one your bank might charge, can be deducted. Similar deductions are available for cash-advance fees on credit card transactions. These are all deemed legitimate and necessary costs of doing business.
3. Smartphones
Entrepreneurs often lament the amount of time they have to spend on their phones. But if you’re working and/or trying to grow your business from your phone, a portion of the device's cost and the cost of a service plan are deductible.
4. Home furnishings
If you have a home office, you’ll need to have chairs and other furniture to make it a comfortable place to work. At night, you might even roll the same leather chair you use in your home office out into your living room. This allows you to enhance your home with purchases that also qualify as tax write-offs.
5. Extra start-up costs
During the first year of any business, business owners may write off up to $5,000 of start-up expenses. But you’re not obligated to stop there. You can write off any additional spending in amortized amounts over the next 15 years. Ask your accountant how to set up a write-off plan for these expenses.
6. Promoting charitable walks
Charitable contributions to qualifying organizations can be written off as deductibles, yet many business owners overlook their sponsorships for fund-raising walks, support of local Little League teams, and other contributions they’ve made throughout the year. Keep records and receipts for all charitable giving and include them in your next filing.
7. Coffee
This is one of the most commonly forgotten write-offs of all. When you stock coffee for brewing at the office or make it at home while working, it can be deducted as a business expense.As a general rule, small business owners should keep records of all transactions relating to their companies from the first weeks of the year through the holiday season. There’s no reason you shouldn’t take advantage of all the tax write-offs that are available to you, as long as you consult with a qualified tax professional beforehand.
