The Crazy Truth About Tax Benefits Of Starting A Small Business
The Crazy Truth About Tax Benefits Of Starting A Small Business - Starting a business is one of the most exciting and rewarding things you can do. But it's also overwhelming, especially when you're just starting out.
What's the best way to save money in your new business? How do taxes work? Where should you keep your receipts? How much will this all cost?
The good news is that there are several types of small business tax deductions available to help offset some of the costs associated with operating a business.
Tax Benefits Of Starting A Small Business
Starting and running your own small business can be a very exciting time in your career path. Not only can starting a small business benefit you personally, but it can also benefit you financially. Small businesses afford its owners several tax benefits to help you reduce your tax liability on an annual basis.
Also Read: Tax Tips for Small Employers
Home Office Deduction
If you use a portion of your home to run your business, you may be able to deduct a portion of your rent or mortgage payment, utilities, repairs and other expenses on your taxes.
To claim a home office deduction, you must have a dedicated space in your home where you run your business. You must prove that the space is used exclusively for business purposes.
Business Use of Vehicle
Many business owners use their vehicles for both personal and business reasons. If you own your car personally, you can deduct the costs of using it for business purposes from your income taxes.
You can choose to deduct actual expenses for gas, repairs, tolls and parking or you can take the standard mileage deduction rate, which is set by the Internal Revenue Service at 50 cents per mile.
Health Insurance Deductions
If you are self-employed, you can deduct premiums for your health insurance policy if you cover yourself and at least one other person.
The deduction is available regardless of the number of employees in your business. However, the deduction applies differently depending on whether you have one employee or more than one employee.
Also Read: How to Itemize Sales Tax
Retirement Plan Deductions
If you have a retirement plan, you can deduct contributions you make to it. This includes traditional IRAs, 401(k)s, and other plans. In addition, employers who contribute to employee retirement plans are eligible for tax deductions as well.
If you're traveling for business, you can deduct your expenses as a business expense. For overnight or out-of-town trips that are business-related, you can also deduct the expenses you incur.
You may deduct small business trip expenses, such as airfare, transportation, meals, entertainment and hotel stays.
If you want to combine your business trip with a personal stay, you can only deduct the business expenses of the trip from taxes.
Starting a small business can be an attractive option for many people. In addition to providing you with more freedom and flexibility, it can also come with a number of tax benefits.
If you're considering starting your own small business, make sure you know about these tax benefits before making the leap.