Best Small Business Start Up Write Offs : THE ULTIMATE LIST

The top 14 tax deductions for a small business start up in the 2020 – 2021 tax year detailed in the guide below can help business owners lower their income tax bills by claiming all the deductions related to their work. These tax write-offs will help speed up and streamline your income tax filing process and reduce the amount you owe to the government in taxes.

Let’s get started with the best 14 tax write offs for 2021!

Here’s a massive chunk of what you need to know about maximizing tax deductions for your small business:

Short Cuts On Deck

Best Tax Deductions for Small Business and Start Ups

Small businesses and start ups can write off a number of expenses as tax deductions to help lower the amount they owe on their income tax. The best small business tax deductions include:

1 – Business Insurance

Great news! You can deduct the cost of your business insurance on your tax return. If you have a home office, or use a portion of your home to run your business, you can deduct your renter’s insurance costs as part of your home office write-offs.

So no excuses get your business insured. Even if you have to put it on your Business Credit Cards.

2 – Office Supplies

There’s no reason not to get everything you need to run your business professionally. You can write off office supplies including printers, paper, pens, computers and work-related software, as long as you use them for business purposes within the year they were purchased. You can also deduct work-related postage and shipping costs. Be sure to file all receipts for office supply purchases, for documentation.

3 – Education

All educational expenses you take on to help you with your business are fully deductible for tax purposes. The requirements for education-related expenses are that the course or workshop must improve your skills or help maintain your professional expertise. Some educational expenses that qualify for deductions include:

Courses and classes related to your field of work
Seminars and webinars
Trade publication subscriptions
Books related to your industry

So don’t skimp on keeping yourself educated – it’s deductible.

4 – Travel Expenses Related To Work

All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals and more. To qualify as work-related travel, your trip should meet the following conditions:

The trip must be necessary to your business.
The trip must take you away from your tax home, i.e. the city or area in which your company conducts its business.
You must be travelling away from your tax home for longer than a normal work day and it must require you to sleep or rest on route.

5 – Business Promotion And Ads

You can fully deduct expenses related to promoting your business, including digital and print advertising, website design and maintenance and the cost of printing business cards. So stop relying on just word of mouth and let people know your ready to do business and you have something to sell.

6 – Professional Expenses Or Fees

Any professional service fees that are needed to operate your business, such as legal, accounting and bookkeeping services, are deductible for tax purposes. If you use accounting or bookkeeping software for your business, that would also qualify as a tax deduction.

7 – Business Interest Plus Bank Fees

If you borrow money to fund your business activities, the bank will charge you interest on the loan. When tax season comes around, you can deduct the interest charged on business loans and business credit cards. You can also write off any fees and additional charges on your business bank account and credit card, such as monthly service fees and any annual credit card fees.

So there’s no reason why you are not building your personal credit so you can use it to get all the financing you need with business credit.

8 – Employee Salaries And Benefits

If you’re a small business owner with employees, you can write off their salaries, benefits and even vacation pay on your tax returns. There are a few requirements for writing off salary and benefit expenses:

The employee is not a sole proprietor, partner or LLC member in the business
The salary is reasonable and necessary
The services delegated to the employee were provided – meaning they actually did the work

9 – Moving Expenses

Sometimes to grow your business properly you may need to move to another state, well your in luck. If you move and the main reason for doing so is work related, you might be able to fully deduct the costs associated with the move. To qualify, your move has to pass the distance test.

To pass the distance test your new job location has to be at least 50 miles farther from your former home than your old job location was from your previous home.

Basically were not do not use this one if just want to move up the street.

10 – Phone And Internet Expenses

If using the phone and internet is important to run your business, you can deduct these expenses. If, however, you use the phone and internet for a mix of work and personal reasons, you can only write off the percentage of their cost that goes toward your business use. For example, if roughly half of your internet usage is business related, you can write off 50% of your internet expenses for the year.

11 – Home Office Expenses

The gig economy has really given home based grinders the upper hand by making them more legit. That’s why under new simplified IRS guidelines for home office expenses, home-based small businesses and freelancers can deduct five dollars per square foot of your home that’s used for business purposes, up to a maximum of 300 square feet.

To qualify as a tax deduction, your work area has to be used exclusively for business (i.e. you can’t write off the square footage of your dining room if you do your work at the table during the day) and you need to use the home office regularly as your principal place for conducting business.

So find you a 300 square foot space in your house post up an “my office” sign and throw all your work related stuff in there like your laptops, printers, phones and binders. Then holla at your tax guy when the season is right.

12 – Charitable Contributions

You can deduct charitable donations that you make to qualifying organizations. If your business is set up as a sole proprietorship, LLC or partnership, you can claim these expenses on your personal tax forms. If your company is a corporation, you claim charitable donations on your corporate tax return.

Here’s a simple small one you can take advantage of. When your cleaning out the kids closet of clothes they have grown out of, simply bag it up and take it on over to the Salvation Army and ask for a receipt for tax purposes. That’s one for personal.

For businesses I’ll give you an example. I can give away Free Website Design. While I can’t deduct the service I can deduct the hourly rate spent delivering the work. To be sure though we suggest you speak to a true Tax Professional.

13 – Client And Employee Entertainment

If you take business clients out. You can deduct the expense as long as you discuss business during the meeting and the entertainment takes place in a business setting for business purposes. Deduct 50 percent of the cost of these entertainment expenses. You can also deduct as much as 100 percent of the cost of social events held for your employees. Again be sure to consult a Tax Professional.

Now on to my favorite deduction of all!

14 – Start Up Expenses

If you launched a new business venture in the latest tax year, you can deduct as much as $5,000 in startup expenses you incurred in the lead up to your business launch. That can include costs associated with marketing your new business, travel and training costs.

If you spent less than $50,000 total on your business start-up costs, you can deduct $5,000 of those costs immediately.

In the year that your business starts operating.

Here’s an idea! If you got good personal credit you can leverage that to start your business credit with business credit cards. Use a PG or personal guarantee. Then use the funds on the credit card to pay for start up expenses then deduct it all when the time is right. Your can start a real business with 0 money out of pocket.

If you have any questions just join us in the Free group there’s bound to be someone there that can answer it for you.

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