Start-Up Small Business Tax Write-Offs

There a number of small business tax write-offs offered by the Internal Revenue Service (IRS) for start-ups. If you have a start-up business and want to save some money on your taxes, you should be familiar with these small business tax write-offs. Below are some of the most common small business tax write-offs that you can use when filing tax returns for your business.

Allowable Start-up Cost

Based on the rules and regulations set by the IRS, you are allowed to deduct up to $5,000 in start-up costs and another $5,000 on your organizational expenses during your first year. If you fail to deduct the aforementioned costs, you may amortize the said amounts over a period of not more than 180 months beginning from the time when you started your business. Under the IRS rules, you can amortize expenses related to market research, business advertisements, legal matters, human resource training and other items directly associated with business development. The IRS is strict when it comes to the kind of expenses that you write off, so make sure that you follow the rules and regulations set for business-related expenses to avoid getting into trouble.

Educational Expenses

Employee education and training expenses may be deducted from your taxable income. Therefore, if you enroll in trainings that are useful to your business, you can claim the costs of your training as tax deductible. Just make sure that you follow strictly the rules and regulations set by the IRS regarding education deductions to enjoy the deductions. Remember that you can deduct education expenses only if the course you took is useful to your existing business; you cannot deduct the cost of trainings you took to learn to do something new. To get a better grasp of what education expenses are deductible, read the guidelines on educational expenses under IRS Publication 970. The guidelines are pretty much straightforward and easy to understand.

Cost of Vehicles Used for the Business

The IRS allows start-up businesses to deduct vehicle costs and expenses, so if you are using a vehicle for your business, you need to keep track of your vehicle expenses. Yes, you can still claim deductions even if you are using the vehicle for both personal and business purposes. However, only those costs that are directly related to your business operations may be considered deductible. To claim vehicle deductions, you can opt for either itemized actual expense deductions or mileage rate deductions. If you choose to go for itemized actual expense deductions, you need to attach supporting documents such as receipts to your tax returns.

Cost of Equipment Used for the Business

If you buy equipment for your start-up business, you can claim the cost of the equipment as tax deductible. However, the IRS has specific rules about how much you can claim as equipment deductions, so make sure you read Section 179 of the tax code properly before you include equipment cost as part of your tax deductibles.

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