The Ideal Short Tax Guide For Small Businesses

Small business owners often dread the approach of tax season. With the costs of running the business constantly rising, the last thing you need is to pay excessive taxes on every part of your business operation.

What most small business owners don’t know is that there’s actually a lot of leeway when it comes to what you owe in taxes. This is especially true if you’re still building your business from the ground up. Take a look at some of the more favourable parts of business taxes and the deductions that often come with them.

Income tax

When it comes to paying taxes, income tax is the simplest concept to grasp. As the name suggests, this is the tax that you pay for your business’s income. As straightforward as it is, there are still a couple of key pointers you need to remember.

For one, you don’t actually pay income tax on all of your income. You have to pay up a percentage of the employments earnings, pensions, job benefits, self-employed profits, etc. However, different states will exempt other parts of your income as non-taxable. You should get familiarized with the many different laws surrounding business tax code to get a full grasp on what you’re going to be paying.

Marketing expenses

Marketing is a big part of any business’s expenses, and it only grows further as the business sees more success. This means that marketing strategy expenses will often overshadow others. Luckily, it’s something that your business can deduct advertising costs by quite a bit.

Everything from business cards to digital advertising is considered a marketing expense that can be deducted. Your business’s website counts as a crucial tool for online marketing, which is why you can add it to your marketing expenses. Small businesses will often have merch that they will use to advertise to local markets. Branded items like pens, lighters, and pop sockets are some smaller examples. Even advertising on local billboards is considered a necessary expense for your business.

Home office deductions

Many small businesses operate from the owner’s home instead of a separate office or establishment. This comes with a variety of practical benefits when it comes to work, but there are also tax benefits that need to be considered. Home office deductions are probably the most well-known benefits, but they are often misunderstood by business owners.

They are used to give you credit for the many expenses that come from running the business from your own home. They were previously a rarity, but with the current rise of self-employment and entrepreneur work, they have seen a resurgence. A percentage of your home office expenses can be deducted if related to rent, mortgages, property taxes, and utilities such as an internet connection. Similarly, you can account for the wear and tear that happen to your home as you use it as a business hub. You might want to look into tax depreciation schedule quotes to figure out if you can have this damage deducted from your taxes.

Keep in mind, your home has to be used for business purposes regularly if you want to enjoy these tax benefits. Another requirement is that it is the primary place of business for your company.

Equipment deductions

Every business requires equipment and machinery to create and distribute their products. Often, this machinery is a bit too expensive to be funded by the business owners alone. This is why governments offer incentives for businesses that are starting out in the form of tax deductions.

You can deduct just about anything that is essential to your business. If you’re running a graphic design studio, you’ll need laptops and printers to help you create your work. Delivery services will have to rent or buy vehicles to help them transport goods. Whatever you need for the business is automatically liable for a deduction.

Conclusion

As it turns out, you shouldn’t be too stressed out about tax season. Any small business that is wisely investing its budget into crucial elements that will help it grow can also enjoy a bunch of tax benefits and breaks. Consider the many benefits that were previously mentioned and you’ll realize that it’s a lot easier to save a buck while investing than you might have thought. Make sure you note all your business expenses and try to get them deducted and you’ll have a much nicer ending to the tax season.

  Modified On Nov-25-2019 06:24:22 AM

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