Tax Deductions for Small Businesses
General Rule:

Any expense spent to earn your income is fair game for tax deductions.

Record and itemize any costs that helped you sell, deliver, invoice, or collect even $1.00 of revenue.

Business Deductions

Business auto deductions​​

  • NOTE: Requires substantiated proof of business, personal, commuting and total miles used each year.

  • You are allowed either Standard mileage or Actual vehicle expenses. Whichever is greater.

    • Standard mileage:

      • Deduct cents per mile for business miles driven. Choose standard mileage in the first year to have option of standard mileage or expenses in future years.

    • Actual vehicle expenses:

      •  Deduct business portion of gasoline, insurance, tags, inspection, plates, repairs, maintenance, and depreciation costs. 

  • Other business auto deductions:

    • Parking and toll road fees

    • Business portion of vehicle interest expense.

  • Depreciation versus Section 179 deduction:

    • Section 179 expense:

      • Allows electing for an expense deduction up to $500,000 (as of 2012) for qualified property instead of depreciation.

      • Depreciation-an expense deduction is allowed ratable over the statutory life of assets

        • Note: We do NOT recommend taking accelerated depreciation for business vehicles due to recapture rules.

For Home Offices: (You must qualify)

  • Telephone expense

    • Office in home-

      • The first telephone line into your home is not tax deductible. Other business lines are deductible.

      • Long distance business calls are deductible.

      • Cellular phone usage should allocate portion for personal use.

  • Payroll

    • Employee versus contract laborer

      • Internal Revenue Service has increased auditing

      • 20 important questions to answer. See IRS Form SS-8.

    • Employee reporting requirements can be found on IRS forms 941, 940 & TEC form C-3, 1099s. Most forms due quarterly, some annually.

    • Payroll tax requirements. Less than $50,000 monthly liability, taxes are due the 15th day of following month at local bank.

    • S corporations Must Have salary expense for officers.

Overlooked Deductions

  • Business gifts of $75 or less per recipient

  • Cleaning and laundering services when traveling

  • Depreciation of home computers

  • Employee educational expenses

  • Passport fee for a business trip

  • Self-employment tax (1/2 of tax deductible)

  • Trade or business tools with a life of 1 year or less

  • Uniform and work clothes not suitable as ordinary apparel

  • Expenses indirectly related to job such as refreshments for employees

  • Health insurance premiums for the self-employed (100%)

  • Retirement contributions that need to be made before filing return.

Do you own a small business? Keep more of what you earned with these helpful tax guidelines and business deductions: 

SETFS, LLC

Office: (281) 370-6622

   Cell: (936) 870-8256

Katherine Nixon
CPA, CPC, PMP

Office : 281-370-6622

Cell: 936-870-8256

Katherine Nixon is a licensed CPA and financial advisor. Securities offered through J.W. Cole Financial, Inc.

Member FINRA/SIPC www.finra.org and www.sipc.org Advisory services offered through J.W. Cole Advisors, Inc.
J.W. Cole Financial, Inc., J.W. Cole Advisors, Inc., and SETFS, LLC are unaffiliated entities. Advisors must be properly registered in the state where you live in order to conduct securities related business with you. A response to your request for information might be delayed in order to assure our compliance with this regulation. No information provided on this site is intended as a solicitation to buy or sell any security. The investments and services mentioned may not be available in every state. No security will be offered or sold to any person, in any state in which such offer, solicitation, purchase, or sale would be unlawful under securities laws of such jurisdictions.

 

Katherine Nixon is a licensed CPA, not a CPA firm, yet does tax return preparation.

​© 2017 by Katherine Nixon. All Rights Reserved