As April 15th rears its inevitable head, your small business deductions are probably moving from their home on the procrastination shelf to the very forefront of your mind. Many small business owners miss out on some seriously lucrative write-offs each year, either because they simply aren’t aware of them, or because they assume they don’t qualify for them.
1. Self-employed health insurance premiums
If you’re a self-employed small business owner and pay for your own health insurance, 2013 is a very special tax year indeed. That’s because starting this year, you can deduct the amount you paid for health insurance in 2012 from both your income taxes and your self employment taxes. That’s right – the IRS is inviting you to double dip, so be sure to take advantage and take this awesome write-off twice.
2. Donations to charity
Even if you can’t afford to make a significant cash donation to the charity of your choice, you can help in other ways and still reap the benefits of a healthy write off. Donations of gently-used furniture, clothing, office equipment and other household goods all count as small business deductions.
You can also donate your services to a nonprofit organization for a receipt-in-kind at the end of the year. This means that instead of getting paid for your services, the organization will give you a receipt for hours worked or for the amount you would normally charge for your services. While this can be a significant investment of time and resources up front, it can result in an equally significant write-off come tax time.
3. Employee health insurance premiums
Do you pay for at least 50% of your employees’ health insurance? If so, you could be eligible for a 35% tax credit for 2012 and up to a 50% tax credit in the next several years (read: if you’re not paying for health insurance, now is the time to start!
Smaller is better when it comes to this particular write-off: companies that can take full advantage of the 35% credit will have less than 10 employees, with each of those employees averaging no more than a $25,000 annual salary. This deduction is perfect for a growing small business that currently employs a few people part time.
4. Vehicle depreciation
We’ve all heard the old adage: as soon as you drive your brand new car off the lot, it depreciates in value. Well, if that vehicle happens to be used for your small business, that depreciation can work to your benefit. In addition to deducting the cost of gas, mileage, maintenance and regular upkeep, you can also take a first year depreciation deduction. 2013 is particularly good year to take this deduction, because depreciation was significantly greater in 2012 than in recent years past.
5. Retirement tax credit
No matter which type of retirement fund you’re currently contributing to, you’ll enjoy completely tax-free contributions in 2013. What’s more, if you contribute at least $2,000 for the 2012 tax year, the IRS gives you a credit which can be used to lower your taxes.
6. Your taxes
This might be one of the most missed small business write-offs of all – your taxes! The amount you pay to your tax professional each year, together with cloud accounting software subscriptions and other tax tools, is 100% deductible. Happily, this makes that multi-paged invoice from your accountant slightly more bearable.
7. Ongoing education
Many professionals are required to take ongoing education classes in order to stay abreast of industry trends and the latest professional research. Small business owners are no different, at least according to Uncle Sam. Entrepreneurial courses, small business classes and education specifically tailored to your line of work are all tax deductible – just make sure each class would be considered “regular and necessary” within your industry.
Researching small business deductions may be intimidating and overwhelming, but investing some time and learning as much as possible is the best way to ensure a fat refund come April.
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