What You Can Deduct from Your Taxes

As a new business owner, you probably don’t spend much time thinking about your taxes. Of course, your operations are the priority, but make sure you track everything so you can get the best deductions when April rolls around.

Computer Equipment and Software

Every business needs an office. Whether you are working in a company office or a home office, those computers and computer programs are all tax deductible if used for your business.

Track every computer accessory you buy as well. I recently purchased a 2TB NAS (network attached storage) to backup my computers through my home network. Backup hard drives that are used for company files count as tax deductible.

I also just bought Windows 8 for my laptop on release day. That $40 is going to be used for business activities, so it will go on the write-off list.

Office Supplies

Printers, paper, ink, pens, pencils, rulers, scissors, and pretty much anything else you can get at an office supply store are most likely going to be used for your business, so save those receipts.

Office furniture is another big ticket item that is most likely going to be used in your office, so make sure to include that as well.

Tools of the Trade

Whatever you do, there is bound to be something unique that you will have to buy for your business. For my DJ business, I had to buy speakers, a mixer, special software, cables, a laptop, headphones, and a table for live events. For my blogging business, I need hosting, domain registration, writing software, Quickbooks, and other computer related gadgets. Each business has unique needs, and they are all tax deductible.

Make sure to track everything that you spend that is used for your business in any way. Some things might not be deductible on your schedule C or business tax filing, so make sure to ask your accountant so you stay out of trouble.

Vehicles

This is a tricky one. If you have a vehicle that is used primarily for your business, you can write off the costs associated with it. However, you have to be able to prove to the IRS that it is a company car, not a personal car. They require you to have your own personal vehicle if you are writing off your business vehicle.

This is another area that should be discussed with your accountant before including it on your tax forms.

Home Office Space

If you have a home office, you can write off that percent of your costs of home ownership, but only if that space is used exclusively for your business. If you have a 200 square foot home office in a 1000 square foot home, you can write off 20% of your costs, which can add up quickly.

The utilities and internet costs of your home office can also be deducted.

Again, discuss this with your accountant. Home office deduction requirements are very tricky and you don’t want an unexpected visit from the tax man.

Keep Good Records

To make any of this possible, keep good records of your expenses and all of your receipts. You have to be able to prove that you spent the money and that it was business related to be able to write it off and save money on your taxes.