Tax time can be particularly stressful for small businesses. The good news is, the federal government has made it possible to deduct some of the costs associated with operating your business. The trick is, you’ve got to know what these tax deductions are so you can take advantage of them. Otherwise, you could be missing out on saving some serious cash. That said, here are 5 of the most commonly missed small business tax write-offs to ask your accountant about.
Inventory – With the accrual method of accounting, businesses can include inventory in the total cost of goods sold, which reduces income for tax purposes. Certain small businesses however, such as those in the service industry, are allowed to use the cash method, which treats items in inventory as supplies and materials, both of which are deductible.
Interest – You probably have a credit card (or several) that you use to fund some of your small business operations. What you may not realize is that the interest you’re paying on that monthly balance may qualify as part of your small business tax deductions. It ultimately depends on what items were purchased using the card, but it’s worth having a discussion with your accountant.
Accounting/Bank Fees – Did you pay someone to prepare the taxes for your business last year? If so, the fee you paid could be counted as a deduction. Similarly, any bank fees or other finance-related expenses, such as payments to credit card processing companies might also qualify as part of your small business deductions.
Bad Debts – If your small business issued a loan, such as to an employee or vendor, and it hasn’t been paid back after a certain amount of time, it could be designated as a bad business debt. In some cases, these types of debts can be included in your tax filings as small business tax write-offs. Again, there are specific circumstances and criteria that must be met, so consulting with a tax advisor is always recommended.
Carryovers – Were there any tax deductions that your company was unable to take advantage of in years past? If so, you may be entitled to claim them in this year’s filing. Some examples of carryovers include capital losses, contributions to charities and home office deductions. Your accountant should be able to help identify any such available deduction.
Not sure if you qualify for any of these? A great place to start is by reviewing last year’s tax return to see which, if any, deductions you took advantage of. This will help you to determine what to claim for your next filing and also identify those deduction opportunities that may have been missed. Ultimately, you should sit down with a professional who is experienced in small business taxes and can work with you to ensure that your company receives the greatest savings possible.
Integrity Payment Systems builds credit card processing solutions specifically to help your business improve cash flow. We serve businesses that provide their goods and services to the buyer at the time of payment such as restaurants, auto-repair shops, retail stores, hair salons and many others. Interested in learning how Integrity can help you with your credit card processing solutions? Click here to contact us today!